The Hindu Business Line : Equity sale by new telcos: TRAI seeks details

New Delhi, Jan 6 The Telecom Regulatory Authority of India has asked the Department of Telecom to give details of the stake sale done by some of the new mobile companies recently.

The regulator is examining DoT’s proposal to impose a lock-in period on the promoters of new licence holding companies.

The DoT has suggested banning sale of equity shares owned by Indian promoters of the 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.

DoT has sought TRAI’s views on this proposal before finalising it.

In its letter to the regulator, DoT had said that the lock-in was being considered to “prevent fly-by-night operators making a windfall gain.” This was done after concerns were raised over new private telecom players making windfall gains allegedly at the cost of the national exchequer.

The Government’s decision to give out fresh telecom licences on a ‘first-come, first-served basis’ has resulted in windfall gains to some Indian promoters of new telecom companies. Unitech sold its 60 per cent stake in the telecom venture to Telenor, for Rs 4,470 crore. Swan Telecom sold 45 per cent stake to the UAE-based Etisalat for Rs 4,100 crore ($900 million). This was Rs 2,450 crore more than what its promoters paid to acquire the licences in February. Unitech also had acquired licences for 22 circles by paying Rs 1,650 crore to the Government. The valuations received by these Indian companies are unprecedented as neither of them has a single subscriber nor any infrastructure.

The TRAI has asked for details of the transaction including list of promoters and their shareholding before and after selling stake to foreign players.

If the regulator agrees with the DoT proposal, it will not have any impact on the two deals as the stake sale in both cases is being done through issue of fresh equity of shares. Market watchers said that the DoT move will not address the core issue of the Government having lost out on an opportunity to get revenues by auctioning spectrum instead of giving it on a ‘first-come, first-served’ policy.

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