Bharti Airtel, India’s largest telco, may have to pay more than $40 million to buy out Telecom Consultants of India’s (TCIL) 30% stake in its subsidiary Bharti Hexacom, which offers mobile services in six northeastern states (excluding Assam) and Rajasthan.

According to the reports, at present, state-owned TCIL owns 30% in Hexacom. The consultants appointed by TCIL to oversee its exit from Bharti Hexacom have said the reserve price for its stake is set a shade over US$40 milion.

This values Hexcaom, which has a customer base of around 13 million, at about US$136.27 million. Bharti has the right of first refusal to TCIL’s stake in Hexacom.

The communication ministry has now approached the empowered group of ministers to finalize the reserve price based on the consultants’ report. The EGoM, headed by finance minister Pranab Mukherjee, will also consider a report by a committee of directors appointed by TCIL to process its disinvestment, who had said that the stake could have a reserve price of up to US$34 million.

TCIL maintains that it is due to get dividend payment from 2004 onwards when Hexacom began making profits. Second, TCIL had sought the listing of Bharti Hexacom, which too was turned down, on the grounds that the flagship company (Bharti Airtel) is already listed and as such their policy does not permit subsidiaries to be listed. Besides, as per the shareholders agreement, TCIL cannot insist on listing or getting dividend.

TCIL will have to follow a two-stage bidding process, where it would have to first evaluate the technical bids and only those who clear this stage will be considered for the financial bids. TCIL will then have to finalize the stake sale in consultations with both the communications ministry and the department of economic affairs.