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A fight is brewing between the Government and Axiata Berhad, the Malaysia-based foreign investor in Idea Cellular.
Axiata, which owns about 20 per cent in the Indian telecom company, has threatened to take legal action under a bilateral investment treaty against cancelling Idea Cellular’s 13 mobile licences. At the same time, the Government has raked up security concerns around Axiata’s investments in Pakistan.
In a letter to the Prime Minister, Dr Manmohan Singh, the Malaysian company said that if the dispute related to licence cancellation was not resolved within six months, then it could take legal action under the investment treaty signed between Mauritius and India. Axiata has invested into Idea Cellular through two Mauritius based entities.
The Axiata letter, seen by Business Line , says: “The Supreme Court’s decision to cancel 13 of Idea Cellular’s licences without compensation and any further actions taken by the Republic of India to execute this decision amount to a clear violation of rights under the Mauritius-India BIT.”
This letter was sent by Axiata on June 5 and on June 15, the Ministry of Home Affairs sent a note to the Department of Telecom raising concerns about a Karachi-based subsidiary of Axiata, Multinet Pakistan Ltd. The Pakistani entity has launched an inter-connect platform that will act as an exchange for routing voice and data traffic among operators in the South Asian region. The Ministry of Home Affairs has asked the DoT to look into possible security threats from such routing.
Top Government functionaries said there was no link between Axiata’s letter and security concerns raised by the MHA as this was part of an established process. They said that similar concerns were raised when Norway’s Telenor invested in Uninor and Egypt’s Orascom was mulling buying a stake in Hutchison Essar (now Vodafone India).
The Government has asked an inter-ministerial panel to deal with all the legal notices sent by foreign players after the Supreme Court ordered cancellation of 122 licences. Telenor, Russia’s Sistema, ByCell and Loop Telecom have also invoked various bilateral treaties.
> thomas.thomas@thehindu.co.in
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