• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Brand Quest
• The New Manager
• BL Club
• Smartbuy

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth
• Events 2007

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Ramesh Sharma

Offers to quit: The Minister for Communications & IT, Mr A. Raja (left), and the Secretary, Department of Telecommunications, Mr Sidhhartha Behura, at a press conference in the Capital on Friday. –

Thomas K. Thomas

New Delhi, Nov. 7 The Department of Telecom is planning to ban sale of equity shares owned by Indian promoters of new telecom companies for a period of 3-5 years. This means that promoters of companies such as Datacom, Loop, STEL and ByCell, which have recently received telecom licences, will not be able to dilute their equity share during the lock-in period.

The move is to address concerns raised over new private telecom players making windfall gains allegedly at the cost of the national exchequer.

According to an internal DoT note, promoters who have more than 10 per cent stake in the company will not be allowed to sell their share. However, DoT will allow the promoters to bring in strategic investors or go for a public issue by way of issuing additional equity share capital. The lock-in provision will also not be applicable in case shares are transferred to lending institutions due to default in loan repayment by the promoters who have borrowed money.

Under the existing merger and acquisition rules, new players are not allowed to merge with an existing operator for a period of 3 years, but they are free to sell shares up to 74 per cent. The fresh proposal will be discussed on November 11 by the Telecom Commission, the highest decision-making authority of the DoT.

The DoT proposal will have no impact on the recent deal between Unitech and Telenor or the one between Swan Telecom and Etisalat, as they are being done through issue of fresh equity shares. Market watchers say the DoT move does not address the core issue of the Government having lost out on an opportunity to get more revenues by auctioning spectrum instead of giving it on ‘first come, first served’ basis.

“The promoters of the new companies will still stand to benefit because they are selling fresh shares at a premium, which in turn will also increase the value of the equity they hold,” said an analyst.

The Communist Party of India (Marxist), on Thursday, sought an enquiry into the policy decision of the Communication Ministry, alleging a financial scam. The Communications and IT Minister, Mr A. Raja, on Friday said that he will resign if the allegations are proved true. (Related report: Page 4)

More Stories on : Telecommunications | Regulatory Bodies & Rulings

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

Copyright © 2008, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line