The Department of Telecommunications (DoT) plans to issue a show-cause notice to Loop Telecom, asking why its licences in 21 regions across the country not be cancelled for failing to meet rollout obligations.

An internal probe conducted by DoT has revealed that the Essar Group held more than the 10 per cent permissible stake in Loop Telecom. Current laws prohibit a single group, which already has more than 10 per cent stake in one mobile operator, from owning more than 10 per cent in another. Essar is a 33 per cent shareholder in Vodafone Essar.

In its draft show-cause notice, DoT said, “The Essar Group is under a corporate veil and its complex web of companies is indirectly holding substantial equity in Loop Telecom as well as the Vodafone Essar Group of companies which had mobile permits for the 21 circles for which Loop had applied and obtained licences in violation of the licence agreement”.

It also lists the different companies as well as the financial transactions between the Essar Group and Loop Telecom to substantiate its findings.