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In an indication that Sistema Shyam could bid for spectrum in the upcoming auction, the telecom company has asked the Department of Telecom to relax auction rules relating to eligibility.
The operator, backed by the Russian Government, has asked the DoT for more time to comply with the eligibility conditions. It has also sought relaxation on the net worth requirement specified in the auction guidelines.
eligibility criteria
Under the auction rules announced by the DoT, bidders are supposed to comply with all the eligibility criteria at the time of filing their applications. Sistema Shyam wants to be given 90 days after the auction is completed to do so.
“The date for meeting the eligibility criteria for obtaining unified licence should not be the same as the date for meeting the eligibility criteria for participation in the spectrum auction,” Sistema Shyam stated in a letter to DoT.
The company added that since the Government is considering the option of allowing the foreign entities to participate directly in the auctions, a period of at least 90 days must be given to the foreign entity to comply with the licence conditions. The company said it would require time to set up a joint venture to comply with 74 per cent FDI cap and also seek approval of the Foreign Investment Promotion Board.
While Sistema Shyam already complies with the FDI norms, this request is an indication that the Russian investor – Sistema - could also go solo in the upcoming auction. If Sistema bids for spectrum on its own, it will need time to set up a joint venture, find an Indian partner and comply with other requirements for taking a unified licence.
Sistema Shyam has also made a request to consider the net worth of the promoting company while determining the net worth of the entity of the bidding company. According to auction guidelines, net worth of the promoters will not be taken into account while determining the net worth of the bidding company for issuing a unified licence post auction.
This could make it difficult for new players as they may not have the required net worth without taking the promoters’ net worth into account.
“For the purpose of determining the net worth of the applicant company vis-à-vis eligibility for applying for the unified licence, net worth of those promoters having at least 10 per cent paid-up equity holding in the applicant company should be allowed to be taken into consideration,” Sistema Shyam said.
EGOM meet
The Empowered Group of Ministers will meet on October 8 to finalise the auction rules. But DoT officials indicated that any further relaxation in the guidelines is unlikely. The GoM will primarily decide on the one-time fees to be paid by the incumbent players.
> thomas.thomas@thehindu.co.in
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