Bharti Tele-Ventures, which is coming out with its initial public offering (IPO), does not intend to pay any dividends to its shareholders in the foreseeable future.
"The company has not paid any dividends since its incorporation and does not anticipate paying any dividends for the foreseeable future," Bharti Tele-Ventures has said in its draft offer document for the proposed IPO filed with the Securities and Exchange Board of India.
As Bharti Tele-Ventures' major source of cash flow is expected to be its share of dividends paid by its subsidiaries, receipt of management fees and other receipts from its subsidiaries, the company's cash flow will be limited as long as its subsidiaries accumulate losses, says the prospectus.
Certain subsidiaries of the telecom company are expected to continue to incur losses. Bharti Tele-Ventures' consolidate accumulated loss was Rs 204.6 crore as on March 31, 2001.
The declaration and payment of payout in future will be recommended by the company's board in its discretion, and will depend on a number of factors, including legal requirements, its earnings, cash generated from operations, capital requirements and the overall financial condition.
Moreover, most of Bharti Tele-Ventures' arms have entered into debt arrangements which restrict their ability to pay dividends if the payouts are in breach of their obligations under the agreements. These disclosures are a part of risk factors mentioned in the draft offer document.
The subsidiaries of the company include Bharti Cellular, Bharti Mobitel, SC Cellular, Bharti Cellular, Bharti Mobile, Bharti Telenet, Bharti Comtel, Bharti Telesonic and Bharti Aquanet.
Dividend payments by Bharti Tele-Ventures and any of its subsidiaries also require the consent of its strategic and financial partners, Singapore Telecom and Warburg Pincus, the company said.
As per the IPO plans, Bharti Tele-Ventures will offer 18.53 crore equity shares of Rs 10 each at a premium. The issue is being made through 100 per cent book-building process.
