New Delhi: Bharti Airtel, which operates through a joint venture with government-owned TCIL in the Rajasthan circle, is facing severe criticism for denying a dividend to the telecom PSU despite earning profits for many years.

Bharti Hexacom Limited, in which a 70 per cent stake is owned by Bharti and 30 per cent by government-owned Telecommunications Consultants India Limited (TCIL), had earned a net profit of over Rs 700 crore in 2009-10 and its profit is likely to have been around Rs. 650 crore last fiscal.

TCIL has invested over Rs 106 crore in Bharti Hexacom till date since 1995, but has not received any returns so far.

According to official documents, the joint venture has been recording clean profits after tax since 2006-07.

A dividend has been denied on the ground that Bharti Hexacom Limited was using all internal generations for expansion of networks to keep pace with the intense competition in the market.

Asked how much dividend would have accrued to the government so far, TCIL officials declined to comment, but sources said it could be in the range of Rs 600-800 crore.

TCIL had also sought listing of the joint venture, but this proposal was rejected as TCIL did not have enough voting power on the board of the joint venture.

Sources pointed out that the genesis of this problem lies in the redrafted agreement and Articles of Association of the company in 2004. In fact, TCIL was earlier enjoying veto
powers over decisions of the board, which were later diluted.

Bharti had resisted the proposal for listing the joint venture, saying its flagship company is already listed on the bourses and as per company rules, no subsidiary would be listed on a standalone basis.

In fact, Bharti had given TCIL the option to list its 30 per cent equity portion to arrive at a market price which can be used for selling its stake. To this, TCIL has put the ball back in Bharti's court, saying it was for them (the majority 70 per cent stakeholder) to get the right valuation from the market.

The TCIL board is meeting tomorrow and this issue, along with others, may come up for discussion.

TCIL is represented by two members on the board of Bharti Hexacom Limited and they have been raising the issue of a dividend at every board meeting, but have failed to get a favourable response.

The company had recently invited bids to sell its stake, but the process was halted in between as financial bids were not opened in the absence of any reserve price fixed by the

Bharti Hexacom Limited has over 13 million subscribers in the Rajasthan circle and as per estimates available; the joint venture could be valued at over Rs 6,000 crore.