Ban on promoters’ equity sale for three years or till rollout
The Department of Telecommunications (DoT) today came out with a notification under which a UASL (Universal Access Service Licence) holder will have a lock-in period of three years or till the fulfilment of rollout obligations, whichever is earlier, before promoters can sell their equity stake.
The clause will be imposed on promoters with equity stake of 10 per cent or more and whose net worth has been considered for determining the eligibility for grant of a UAS licence.
However, in a relief to telcos like Unitech Wireless (in which Telenor bought a majority stake) or Swan Telecom (in which Etilasat has a majority stake), issue of additional equity shares by a UASL licencee through private placement or a public issue is permitted and is not subject to lock-in.
In case of fresh issuance within the lock-in period, declaration of dividend or special dividend shall not be permitted. The provision for lock-in period will not apply in pursuance with the enforcement of a pledge by lending financial institutions in the event of defaults committed by a UASL company.
DoT’s decision is in line with what it had earlier envisaged, but with some minor changes. T V Ramachandran, director-general of Cellular Operators Association of India said: “The decision has no real impact, as it does not stop deals like that of Swan or Unitech Wireless, which have brought in foreign partners through expansion of the equity capital. Even the new clause that they would not be allowed to give dividends is meaningless, because no telecom company gives dividends so soon. Bharti announced dividends after decades.”
Many telecom companies had contended that the government had issued new UASL licences with wireless spectrum to half a dozen players, who were then primarily trading in the scarce resource, making money by selling it to foreign companies within a few months . As a result, government was losing a lot of money in licence fees.
