The Hindu Business Line : `Bharti plan for 74 pc FDI cap okay'

Paving the way for a possible increase in the foreign direct investment (FDI) stake in Bharti Airtel, the Foreign Investment Promotion Board (FIPB) has taken a view that the company's proposal to increase the FDI cap up to 74 per cent is in line with existing laws.

FIPB has, however, said in an internal note that Bharti's proposal may be considered for approval, subject to the comments of the Department of Telecom. With this, the company's proposal to merge its various telecom operations including cellular, fixed line and long distance telephony under a single company may also get the go-ahead.

Bharti had sent its application to the Government seeking to increase the FDI cap on the company from 49 per cent to 74 per cent. Company officials said the move was taken as an enabling clause to be in line with the new Government policy that allows telecom operators to have FDI of up to 74 per cent. Earlier, FDI only up to 49 per cent was allowed in the telecom sector.

In its application, Bharti said it was moving the application because the present foreign share holding in the company, directly and indirectly, is exceeding 49 per cent of the company's total paid-up equity capital.

"Therefore, we request you to kindly make the following amendments to allow foreign/foreign institutional investor/OCB/non-resident Indian maximum of 74 per cent amounting to Rs 1,850 crore in the equity capital up to Rs 2,500 crore," said Bharti's letter to FIPB. The company has indicated that there would be an inflow of Rs 625 crore in the paid-up equity capital if the proposal is cleared.

The FIPB note said the proposal might be considered as per the comments of the Department of Telecom. On the issue of consolidation of the various subsidiaries the note said, "The proposal of the merger of companies with Bharti Tele-ventures Ltd may be considered as per the orders of the High Court of Delhi."

The proposal to consolidate all Bharti's telecom operations under a single entity had run into rough weather after DoT raised objections to it on the grounds that the company was exceeding the then permissible FDI cap of 49 per cent. FIPB, however, noted that since the laws governing FDI in telecom had changed since then, Bharti's proposal may be allowed.

SingTel, Vodafone and New York Life International are some of the foreign stakeholders in Bharti. According to the proposal, foreign investment in Bharti is being routed through 10 companies of which seven are Mauritius based.

Related Stories:
FIPB defers decision on Bharti merger

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
NTPC scouts for blocks in Egypt, Australia

`Oil prices not to impact GDP rate'

Drill research ship to sail on May 3

Soccer fever grips travel agents, airlines, TV channels

Burmans hike holding in Punjab Tractors to 12.5%

STPI plans incubation centres for small units

Momentum to regain strength

`Bharti plan for 74 pc FDI cap okay'