Financial Daily from THE HINDU group of publications
Friday, Feb 28, 2003
Financial Daily from THE HINDU group of publications Friday, Feb 28, 2003 |
|
|
|
|
|
Info-Tech
-
Telecommunications Higher FDI a boon to cellular majors G. Rambabu
NEW DELHI, Feb. 27 THE approval given by the Group of Ministers (GoM) for hiking the FDI cap in telecom services from 49 per cent to 74 per cent, should come as a major boon to cellular majors Bharti, Hutchison, BPL and Escotel who will now be able to infuse that much more funds to effectively take on the onslaught from limited mobility operators Reliance Infocomm and Tata Teleservices Ltd. All these companies can also go ahead and negotiate with other foreign telecom investors, who had exited the country, but may now want to make a return. With most of their operations across the country yet to break even, and growing pressure on their bottomlines because of the falling tariffs, more FDI in their companies would only be welcomed at this juncture. While the largest operator Bharti has almost touched the existing FDI limit with major investments by Singapore Telecom (28.5 per cent), Warburg Pincus and IFC. Hong Kong-based Hutchison Whampoa technically has a 49 per cent stake in Hutch which offers cellular services in Delhi, Mumbai, Chennai, Kolkata, Gujarat, Karnataka and Andhra Pradesh. First Pacific has a 49 per cent stake in Escotel and AT&T has a dual stake of 49 per cent in BPL Cellular and 33.3 per cent in Idea Cellular. The other major foreign investors are Distacom which has a 42 per cent stake in Spice Communications, TIW Canada (30 per cent) in Shyam Telecom, France Telecom (26 per cent) in BPL Mobile and Vodafone (21 per cent) in RPG Cellular. With the fight between these cellular operators and limited mobility operators hotting up, many of them have been scouting around for more infusion of funds but have found a stumbling block in the FDI cap. More interestingly, for Hutchison, it would "legitimise" its earlier investments, which had come under scrutiny of the Government. It had been accused of circumventing the sectoral cap by "complex financial engineering" which included the allotment of non-convertible preference shares by its domestic partners, which fell outside the FDI purview. Over the past few years, with the telecom sector in a downspin globally, many of them had pulled out of the country, notable among them being British Telecom, Telecom Italia, Telstra, Swiss Telecom, Telia, Hughes, Alltel Corp, Bell Atlantic, Bell Canada, Shinwatra, Bezeq, Telekom Malaysia, Jasmine International and Guangdong Lintech Ltd. Interestingly, although many of the existing investors had also indicated that they would be pulling out slowly, the recent policy changes may now make them want to stick around for a little longer.
Article E-Mail :: Comment :: Syndication
|
Stories in this Section |
|
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription Group Sites: The Hindu | Business Line | The Sportstar | Frontline | Home |
Copyright © 2003, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line
|