DoT looks into Tata, Birla row on Idea

A day after news of the Tata-Birla spat over their shareholding in Idea Cellular broke out, the department of telecom (DoT) said it was considering Tata Industries' offer of bringing down its shareholding to below 10 per cent by June 30, 2005.

Officials said they were yet to issue directions on the matter. They added that the DoT was set to direct the Tatas to immediately disclose their holdings in Idea Cellular to the Birlas.

Interestingly, even as this spat unravels, the development has brought attention on an other instance of 10 per cent excess cross-holding in telecom service licences of Reliance Infocomm and the Reliance Telecom GSM operation - both now fully owned by the Anil Dhirubhai Ambani Group.

Officials at the DoT said while they had not yet looked into this matter, the Tata-Birla spat had drawn attention to it. Any outcome will clearly have direct ramifications on this cross-holding as well.

One possible solution in this case may be an eventual merger or divestiture (the holding company for both operations - Reliance Communications Venture Ltd was listed this Tuesday).

A DoT official told Business Standard: "We are yet to consider if the directives will apply to the Reliance Group as a decision on this issue will be made in the next couple of days".

The showdown over Idea Cellular is due to the regulatory norms which stipulate that a company must not be subject to competition from its own promoters and equity holders who have over 10 per cent stake in another company in the same circle.

The Birlas, who hold 50.14 per cent in Idea Cellular, have contended that the Tatas, who hold 48.14 per cent, also hold a 100 per cent equity in Tata Teleservices, and have, therefore, violated the licence norms.

Reliance Telecom, the undivided Reliance group's first telecom venture in 1995, provides GSM-based cellular services in 8 circles, while Reliance Infocomm has a pan-India presence, and is the country's second largest mobile service provider.