The Hindu Business Line : Lock-in period only for telecom cos’ mergers: DoT

New Delhi, April 26 In a breather to new telecom players, the Department of Telecom has said that there is no bar on acquisition of companies which have recently acquired licences. The three-year lock-in period, mentioned in the new guidelines, will only be applicable in the case of mergers.

This means that companies including Datacom (owned by Videocon), Unitech and BPL will be allowed to offload up to 74 per cent equity to foreign companies as per the existing FDI norms or 100 per cent stake to any non-telecom Indian companies.

Both Datacom and Unitech have been scouting for an international partner. This paves the way for foreign players such as AT&T, which will be able to acquire a controlling stake in any of the new licence holders such as Unitech or even operators such as Aircel and Idea Cellular, which have a mix of new and old licences.

But existing pan Indian telecom players such as Airtel and Vodafone will, however, not be able to acquire equity in any of these companies. According to the M&A norms, no entity can have equity stake of more than 10 per cent in two different companies. So if Airtel wants to pick up more than 10 per cent stake in Datacom then it will not be able to do so.

The new guidelines had raised some doubts on whether the lock-in period was for both mergers and acquisitions or only merger. Senior DoT officials said that the main objective of the M&A guidelines was to keep the number of operators at a competitive level and was not against investment and acquisition.

“The Government has taken a decision to introduce new players with the objective to bring more competition. The three-year ban on merger is basically to ensure that this objective is not diluted. If, however, anyone wants to dilute equity in their company then they can do so,” said a DoT official.

Related Stories:
New guidelines on mergers likely to upset AT&T plans
DoT tightens norms for M&A deals

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