The Department of Telecommunications (DoT) plans to examine the shareholding pattern of several operators, including Loop Telecom and Etisalat DB, in order to ensure that they are complying with the stipulated licence conditions.
DoT has asked the Ministry of Corporate Affairs for its approval to approach the Registrar of Companies to source data pertaining to the shareholding pattern of these firms.
Prior to this, DoT had asked the Ministry of Corporate Affairs to examine the shareholding structure of the telecom companies. Thereafter, the Ministry of Corporate Affairs rejected the request on grounds that the issue should be legally examined while referring to the rules specified in the telecom licences.
The shareholding structure of several telecom companies have come under the scanner on two issues. Under the telecom licence norms, a single entity is not permitted to hold more than 10 per cent stake in two different companies offering mobile services in the same circle. In Etisalat DB?s case, it has been alleged that it is a front company of Reliance Communications through a complex share holding structure.
Similarly, Loop Telecom has been linked with the Essar Group.
The licence conditions also bar operators from selling the equity for three years. Allegations have been made against Tata Teleservices Limited (TTSL) that it sold equity to NTT DOCOMO shortly after obtaining a GSM services licence in 2008. TTSL has argued that the company had received the licences much earlier and could, therefore, sell stake to NTT DOCOMO.
In fact, DoT also plans to examine companies that obtained their licences before 2005.
It is believed that certain established operators had structured their equity through a complex network of subsidiaries to meet the foreign direct investment (FDI) rules. FDI rules allow up to 74 per cent foreign stake. However, a few operators hold 99 per cent economic interest in the Indian venture.
