The Department of Telecommunications (DoT) has asked the Telecom Regulatory Authority of India (TRAI) to reconsider its recommendation to impose a three-year lock-in clause on the sale of a promoter?s equity, while restricting equity dilution for five years.
It is believed that DoT feels these recommendations are contradictory. Prior to this, the regulator had suggested eliminating the three-year lock-in period on any stake sale by promoters who acquired licences after 2008. However, it then recommended a five-year lock-in period on the sale of holdings.
TRAI recommended discarding the lock-in period, as it considered it a hurdle to mergers and acquisitions in a competitive market. In the second case, it recommended a five-year lock-in period to prevent licence holders from selling their stake too soon. The second rule will also apply to those whose licences come up for renewal in 2011.
