Business Daily from THE HINDU group of publications
Wednesday, Aug 15, 2007
ePaper
Business Daily from THE HINDU group of publications Wednesday, Aug 15, 2007 ePaper |
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Info-Tech
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Telecommunications Corporate - Corporate Disputes TRAI’s views may impact Tata-Birla row over Idea
Tatas took the Birlas to court last year saying the latter violated shareholder agreement by disclosing sensitive data on Idea on their Web site. They claim they can buy out Birla’s stake in Idea Cellular for the alleged violation
Thomas K. Thomas New Delhi, Aug. 14 The Telecom Regulatory Authority of India’s (TRAI) views on mergers and acquisitions, particularly those related to cross holding norms, could have an impact on the ongoing dispute between the Tata Group and the AV Birla Group over Idea Cellular. While the existing norms do not permit any single promoter to hold more than 10 per cent stake in two different companies in the same circle, a relaxation on this front could allow the Tatas to strengthen their claim to buy out Idea Cellular from the Birlas. The Tatas had taken the Birlas to court last year claiming that the latter had violated the shareholders’ agreement by disclosing sensitive information relating to Idea Cellular on the AV Birla Group Web site. The Tatas have claimed that as per the shareholders’ agreement they can buy out Birla’s stake in Idea Cellular for the alleged violation. While the Tatas have sought an arbitration on the issue, the Birlas have taken a stance that there was no offence committed that needs an arbitrator. Cross holding
The TRAI had taken a view, in May 2006, that the Tatas cannot hold equity both in Tata Teleservices and Idea Cellular since cross holding was not permitted under the current telecom licence norms. “Compliance of the licence norms needs to be addressed by the Department of Telecom,” TRAI said in its letter. Sources close to Birla Group said that if the Tatas were to exercise their claim of buying out the Birla Group from Idea Cellular, they could face hurdles given the laws prohibiting cross holdings. On the other hand, the same rules are being reviewed by the TRAI in a bid to facilitate mergers and acquisitions in the telecom sector. If TRAI were to relax these norms then it would allow the Tatas to exercise their rights subject to the Supreme Court’s decision. Dispute points
However, sources close to the Tata Group said that the moot point in the dispute was not control over Idea Cellular but the alleged violation of the shareholders’ trust by the Birla Group. They said that having invested heavily in CDMA technology, it was unlikely that the Tata Group may be interested in GSM operations owned by Idea Cellular. They, however, also added that the TRAI review did not have a bearing on the dispute as there will be no common promoter between Tata Teleservices and Idea Cellular even if the buyout happens. Both the Tata Group and Birla Group declined to comment. TRAI is expected to give its recommendations this week.
Related Stories: Aditya Birla group to buy out Tata stake in Idea Tatas may agree to Birla offer on Idea `Tatas will dilute stake in Idea at right time, price' Tatas may not have given relevant details on Idea Cellular, says Birla More Stories on : Telecommunications | Corporate Disputes | Regulatory Bodies & Rulings
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