Rel Comm gets nod for 74% FII stake

Reliance Communications' proposal seeking approval to raise the permissible foreign institutional investor (FII) holding up to 74 per cent under the portfolio investment scheme has been cleared by the Foreign Investment Promotion Board, according to sources.

The company had sought to increase the limit for purchase or sale of shares and convertible debentures by FIIs to this ceiling, which is the maximum possible foreign investment, direct or indirect, that any telecom operator in the country can have.

This proposal and another, from Bharti Airtel Ltd, had been listed for discussion at the last meeting of the board (FIPB) held on June 13. The decision on the Bharti proposal is not yet known.

The ceiling includes the total composite foreign holding including but not limited to FIIs, NRIs, FCCBs, ADRs, GDRs, convertible preference shares, proportionate foreign investment in Indian promoters, investment companies, including their holding companies.

The remaining 26 per cent has to be owned by resident Indians or an Indian company. The proportionate foreign component of such an Indian company is also counted towards the ceiling of 74 per cent.

While FDI up to 49 per cent is allowed under the automatic route, the FIPB's approval is required for foreign investment beyond 49 per cent and up to 74 per cent. On March 31 this year, Reliance Communications had a total foreign share holding of 26.2 per cent, of which FIIs held 19.8 per cent.

The Reliance proposal and one by Bharti Tele-Ventures Ltd (now Bharti Airtel) had been deferred for further discussion on May 12 before being listed for approval at the FIPB meeting on Tuesday.

Bharti had filed a proposal with FIPB to take note of the fact that it had become an operational company and would, therefore, be governed by provisions of the automatic route of investment, with respect to FDI policy.