The Hindu Business Line : Roll-out may be linked with sale of equity by new telcos

New Delhi, Jan. 9 The telecom regulator has suggested that the Government could consider linking roll-out obligation to sale of equity by promoters of new telecom players in case it is felt that no lock-in period may be specified for shares held by the promoters.

In a consultation paper issued on the issue of lock-in period, the telecom regulator has also said that the Department of Telecom should extend the rules on barring promoters from diluting their equity to acquisitions also. At present, DoT has prohibited new telecom players to merge their company.

Policy review

The telecom regulator is reviewing the policy in order to prevent windfall gains by promoters of new telecom companies.

While DoT has proposed to ban promoters from diluting their stake for a period of three years, TRAI said that other options could also be considered to prevent non-serious players from taking the licence.

“One option could be to link sale of promoters’ equity with meeting the roll out obligations i.e. no sale of any equity should be permitted before roll out obligations are met,” Trai said in its paper.

The regulator has sought the views of all the stakeholders after which it will send its final recommendations to the Government.

Concerns

A large number of new operators have entered the cellular market to tap its increasing potential. Under the current licensing regime, there are no direct and specific provisions on lock-in of equity shareholding and increase of equity.

“There are growing expressions of concerns on making windfall gains through financial restructuring. This could distort the market economics and also affect the sustained growth of the industry.

“As spectrum is a limited national resource, any exploitation of the spectrum allocated under a telecom license for undue gains may not be allowed as it would defeat its very purpose and would also be counter productive for the industry as a whole,” Trai said in a press release.

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