New Delhi: Amidst the controversial sale of stake by two new telecom operators, Swan and Unitech, at a huge premium, the telecom regulatory authority of India (Trai)on Thursday recommended a 3-year lock-in period for stake sale by companies, which have recently got licences, in a bid to prevent them from making windfall gains overnight.
“...the main objective of the authority has been to recommend measures to block the unearned gains arising from transaction in stakes of promoters particularly when the value of spectrum is not getting correctly reflected in the entry fee,” Trai said in a statement.
New telecom licencees tend to sell stake as they get start-up spectrum (radio frequency) bundled with the licence and demand huge premium in the market.
There should be a lock-in of the equity share capital of promoter(s), whose net-worth has been taken into consideration for determining the eligibility for grant of UAS licence, for a period of three years from the effective date of licence, it added.
Last year, the Department of Telecom (DoT) had suggested that existing telecom licensing norms be amended and a three to five-year lock-in be imposed on the sale of equity of promoter(s) in new entrants, including Swan, Shyam, Unitech, Loop Telecom, S Tel and Datacom, which were all given licences in early 2008.
The DoT referred this proposal to the telecom regulator.
On the issue of additional share capital, the regulator said, “the licensee companies/their holding companies by way of private placement/public issues should be permitted in accordance with statutory provisions (Sebi and Companies Act) subject to the condition that during the period coinciding with the lock-in period on sale of promoters equity, the equity of the promoter(s) shall not fall below 10% of the total aggregate”.
Besides, the management control of the licensee company shall be governed by the terms and conditions of the Licence Agreement.
Trai has, however, permitted the promoters to sell their equity share even during the lock-in period with prior written approval of the Licensor (DoT) and on fulfillment of roll out obligations.
“This is subject to the condition that 50% of the profit earned on sale transaction of promoter(s) equity shall be retained in the business as a special reserve and utilised for telecom network expansion only, while the balance shall be transferred to the Licensor,” Trai said.
The profit on sale of such shares is defined as the difference between sale value/agreed value of equity shares on the date on which the transfer of such shares take place and their face value on the date of application of the telecom licence.