Thomas K. Thomas
New Delhi, April 27
NOTWITHSTANDING objections raised by the Department of Telecom (DoT), the Foreign Investment Promotion Board (FIPB) has referred a Temasek Consortium proposal to pick up 47.6 per cent stake in Idea Cellular for approval from the Cabinet Committee on Economic Affairs (CCEA).
The FIPB said that since the total foreign direct investment proposed is Rs 820.82 crore, it would require the CCEA approval.
The Singapore-based STT Communications and the Malaysia-based TM International had proposed to make the investments in Idea Cellular, acquiring the entire stake held by US-based AT&T Cellular.
Earlier, DoT had objected to the proposed investments on the ground that it violated licence norms. DoT said Temasek, the ultimate beneficial shareholder of STT Communication, is also the majority shareholder of Singapore Telecommunication (SingTel), owning 28 per cent of the total equity capital of Bharti Tele-Ventures. According to DoT, no single entity can have more than 10 per cent equity in two different companies offering services in the same area. It had pointed out that it had used the same principle in stopping the entry of Bharat Sanchar Nigam Ltd in Delhi and Mumbai circles as MTNL was also owned by the Government. Idea Cellular was also asked to take the consent of Bharti Tele-Ventures in terms of Press Note 1 of 2005.
Idea had contended that the proposal did not attract the provisions of Press Note 1 since none of the directors of ST Telemedia and STTC are nominees or employees of Temasek. There are also no common directors between STTC and SingTel. Idea also said that Temasek was not involved in the business, operational and management decisions of STT. In fact, STTC and SingTel are competitors in a number of markets such as Singapore and Indonesia. Idea pointed that even after the proposed deal, 57 per cent of the company's equity would be held jointly by the Tatas and the Aditya Group. The FIPB, however, recommended the proposal for approval subject to RBI and SEBI guidelines.