Cash-strapped new telecom licensees like Unitech Wireless, the telecom arm of the realty major Unitech, have got yet another relief from the government, though indirectly. The promoters of the firm are now free to sell their stakes if they so wish, as, with the model code of conduct coming into force, the government will now not bring about the crucial law barring their promoters to sell their equity and declare special dividend for a period of three years.
Others to benefit will be the Venugopal Dhoot led, Datacom, Essar group?s Loop Telecom and Swan Telecom.
As reported by FE recently, these firms got a huge relief when the government changed the licence conditions to levy penalty on delay in roll out obligations from the date of grant of licence to the date of allocation of spectrum in different circles. None of these firms have either achieved financial closure or ordered for equipments.
Official sources said that the proposal to bar promoters of new telecom licensees, all of whom were granted licences on January 27, 2008, is still at a discussion stage in the Telecom Regulatory Authority of India (Trai). Even if the regulator submits its recommendations at the earliest, which would be within a week, the government can?t process it due to the model code of conduct.
?Had the government wanted the law to come into force, it could have issued a one-line statement saying that the law to this effect is effective and the modalities would have been announced later, once the Trai recommendations are received,? an official said.
In fact, the department of telecommunications (DoT) did the same for operationalising the mobile virtual network operators (MVNO) policy by announcing on February 25 that it had accepted the Trai recommendations on MVNO and detailed guidelines would be issued later upon receiving detailed responses from the regulator.
The lock-in period for the promoters of new licensees was the brainchild of communications and IT minister, A Raja, who was last year, under attack when Unitech Wireless and Swan sold stakes to foreign players at valuations of around $2 billion, while they got the licence with start-up spectrum for Rs 1,650 crore and Rs 1,350 crore respectively. Raja was accused of causing losses to the exchequer.
The proposal, which was then cleared by the telecom commission, the apex policy making body of DoT that promoters won?t be able to sell their equity or issue special dividend for three years, however, they could issue fresh shares to raise funds. The matter then had to be referred to Trai as it is mandatory for holding consultations with the regulator for amending the terms and conditions of the licence agreement.
Interestingly, all the stakeholders have communicated to Trai their opposition to the proposal on the grounds that it is retrograde, anti-competitive and work against bringing consolidation in the sector.A