The Department of Telecom has decided to examine the shareholding pattern of telecom companies including Loop Telecom and Etisalat DB in order to check if they are compliant with the licence conditions.
The DoT has sought permission from the Ministry of Corporate Affairs to approach the Registrar of Companies to source data pertaining to the shareholding pattern of these telecom firms.
The DoT had earlier asked the Ministry of Corporate Affairs to examine the shareholding structure of the telecom companies. But the Ministry referred the matter back to the DoT saying that the issue should be legally examined in the light of the rules specified in the telecom licences.
The shareholding structure of a number of telecom companies have come under the scanner on primarily two issues. Under the telecom licence norms, a single entity is not allowed to hold more than 10 per cent stake in two different companies offering mobile services in the same circle. In the case of Etisalat DB, for example, it has been alleged that it is a front company of the Anil Ambani-promoted Reliance Communications through a complex share holding structure.
Similarly, Loop Telecom has been linked with the Essar Group.
The licence conditions also bar operators from selling equity for a period of three years. Allegations have been made against Tata Teleservices that it sold equity to Japanese telecom major NTT DoCoMo soon after it got permission to offer GSM services in 2008. The Tatas argue that they had received the licences much earlier and were therefore in the clear to sell stake to NTT DoCoMo.
While all the companies have denied these allegations, the DoT wants to be sure not just for operators who got licences in 2008 but also for those companies that got their licences before 2005.
There have been allegations that some of the older players had structured their equity through a complex network of subsidiaries to meet with the foreign direct investment rules. FDI rules allow up to 74 per cent foreign stake but there are some operators which have as much 99 per cent economic interest in the Indian venture.
Data on licences
While MCA has given raw data on licences issued post 2005, information linked to licences issued pre-2005 are in a non digital format.
For this the DoT has requested MCA to allow the DoT officials to physically visit various Registrar of Companies in different parts of the country.