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DoT to consider lock-in period for promoters

DoT to consider lock-in period for promoters
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First Published: Mon, Apr 06 2009. 10 17 PM IST
Updated: Mon, Apr 06 2009. 10 17 PM IST
New Delhi: The department of telecommunications, or DoT, the telecom policy making arm of the government, has decided to form an internal committee to look into the country’s telecom regulator’s recommendations on the lock-in period before promoters of phone firms can sell their equity.
The committee’s views along with inputs from the finance ministry will be submitted to the law ministry for approval, according to a DoT document on the subject reviewed by Mint.
The Telcom Regulatory Authority of India, or Trai, had submitted its recommendations to DoT on 12 March.
In its recommendations, the regulator has proposed a three-year lock-in period and suggested promoters may be allowed to sell their equity with permission from the government if the company had fulfilled network roll-out obligations. They would also have to agree to give 50% of the profit earned from the sale to a special reserve to be used for telecom expansion of that company.
New telecom aspirants such as Swan Telecom Ltd and Unitech Wireless Ltd have sold equity to Emirates Telecommunications Corp., or Etisalat, of the United Arab Emirates and Norway’s Telenor ASA of Norway leading to criticism that the new phone firms were selling equity at a profit on the basis of the spectrum rights they have rather than a business on the ground. The firms said they were not making profits on the sales because the money being invested by the buyers was for fresh shares.
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First Published: Mon, Apr 06 2009. 10 17 PM IST
More Topics: Telecom | DoT | Trai | Lock In Period | Equity |