The Hindu Business Line : Daltotrade’s plans to hike stake in Meta Telecomm hits hurdle

New Delhi, May 1 After ByCell, another telecom company’s plans to infuse investment into India have hit a rough patch with Foreign Investment Promotion Board (FIPB). The Ministry of Home Affairs has refused to give security clearance to Daltotrade Ltd’s plans to hike stake in Meta Telecomm, while the Revenue Department has sought its rejection, in the absence of details about the foreign company.

The FIPB has now directed establishing the antecedent of the foreign collaborator, and deferred a final decision on the issue.

According to sources, during a recent meeting of the FIPB on April 9, the Ministry pointed out that the foreign investor (Daltotrade Ltd) has 42.7 per cent investment in Belarus’ bank — Mezhtorgbank.

The Russia-based Alfa Bank has acquired about 40 per cent of the shares of the Belarusian Mezhtorgbank. The Russian bank intends to acquire the controlling stake. However, the Ministry is learnt to have pointed out that Mr Mikhail Fridman, President, Alfa Group, was reported to be under investigation by a consortium of European anti-money laundering agencies.

Also, Alfa subsidiaries are found in the Volcker Report on the oil-for-food scandal, they alleged. “The Ministry has said that considering the tainted background of the foreign investor, it does not recommend the grant of security clearance in this case,” sources said.

Daltotrade Ltd, Cyprus, a company registered in Nicosia and engaged in undertaking of turnkey and other contracts for providing telecom and infrastructure-related services, currently holds 40 per cent stake in the New Delhi-based Meta Telecomm, which was incorporated in 2005 to undertake the business of mobile telephony services in the country. The company has filed applications for International Long Distance and National Long Distance services licence with the Department of Telecom.

Meta Telecomm has sought approval for hiking the foreign equity participation from 40 per cent to 73.45 per cent entailing inflow of Rs 12.5 crore.

The company’s proposal was discussed in the FIPB’s meeting in March 28 also when the Ministry of Home Affairs had sought its deferment to furnish its views on the issue.

It may be recalled that ByCell Telecommunications India’s FDI proposal finally received clearance from the FIPB in February, after being deferred in December 2007 on ‘security grounds’.

The Prime Minister’s Office (PMO) had received complaints that ownership of the firm was not clear and the proposal involved investment by some Russian citizens and the funds were being routed through Switzerland.

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