Busiess - India;DOT proposal may hit new licencee companies

The proposal of a three year lock-in-period by the department of telecommunications (DoT) on the sale of equity in new licencee companies, if implemented, will have serious repercussions on three firms - Tata Teleservices, Aircel, and Idea Cellular. If the proposal is approved, their plans to sell equity will be impacted.

Tata Teleservices has recently sent a letter to the DoT seeking clarification on this issue. The company has recently announced its plans to sell its 26 per cent stake to Japanese major NTT Do Co Mo for around $2.7 billion.

Aircel has also been looking for a buyer to sell its majority stake. Since December 2006, the DoT has awarded 144 licences.

Out of which. Idea has licence for 10 circles, Tata Teleservices in three circles, Aircel and Dishnet in seven circles and Spice in four circles.

All these licences were awarded prior to the new entrants in the field - Swan, Unitech, Datacom, Shyam and Local Loop. Interestingly, Spice and Dishnet have already sold their companies and have existed from the telecom services.

Telecom licences are awarded on circle basis. Therefore, any decision regarding lock-in-period will seriously impact the plans of the existing operators.

The Telecom Commission has already approved the lock-in-period proposal and has forwarded it to the Telecom Regulatory Authority of India (TRAI). Nripendra Misra, chairman of TRAI confirmed that such a proposal has come from Telecom Commission for its recommendations.

"The authority will complete its process of consultation and it will take about 45 days," said Misra.