American Tower may get nod to up Indian arm stake

American Tower Company's proposal to set up a wholly owned subsidiary here could be cleared by the Department of Telecommunications, albeit with a rider that the firm shall dilute 26 per cent stake to the public over five years.

The DoT's clearance is essential for securing the approval of the Foreign Investment Promotion Board, which is scheduled to meet on December 8.

Through the proposed subsidiary, the US-based owner and operator of communication sites hopes to strengthen its presence in the world's fastest growing mobile market.

Boston-based ATC was acquiring 100 per cent stake in the existing Indian venture "" ATC Tower Company of India Ltd "" by buying out the individual resident investor, official sources said.

At present, ATC has a 48.78 per cent stake in ATC India, while the individual investor holds 51.22 per cent.

The divestment clause which was invoked in case of Coca Cola years ago is applicable for ATC as well. It is subject to the clause that the company shall divest 26 per cent stake in favour of the Indian public, if the investor is listed in other parts of the world. As ATC is listed on NYSE, the clause will be applicable to it.

ATC wants to go it alone in India. It is an Infrastructure Category-I provider, a category in which 100 per cent FDI is allowed by the government.

ATC has to get FIPB's approval to increase its stake beyond 49 per cent. At present, FDI up to 49 per cent is under the automatic route. Sources said while the DoT might not have any objection to ATC's proposal for setting up an Indian arm, the department may put in a rider.

The proposal will first have to be cleared by the DoT before it gets FIPB's nod. ATC is also in talks with Reliance Communications for a stake in the Anil Ambani company's tower venture.

RCL is hiving off its 15,000 CDMA and GSM towers into a separate company. In the new company, ATC is reportedly likely to take 5-15 per cent equity.