After going back and forth, the Department of Telecom has finally decided to impose a three-year lock-in period on the equity stake held by promoters of new telecom companies.
The DoT has notified amendments to the unified access services (UAS) licence, barring promoters from selling their stake for three years. However, the DoT has allowed new players to issue fresh equity to strategic investors.
A DoT statement said, “There shall be a lock-in period for sale of equity of a person whose share capital is 10 per cent or more in the UAS licensee company on the effective date of UAS licence and whose net-worth has been taken into consideration for determining the eligibility for grant of UAS licence, till the completion of three years from the effective date of the UAS licence or till fulfilment of all the rollout obligations, whichever is earlier. In case of issue of fresh equity, within the lock-in period, the declaration of dividend and special dividend shall be barred.”
“The provision of lock-in period shall not apply, in pursuance to enforcement of pledge by the lending financial institutions/banks in the event of defaults committed by the UAS licensee company,” it added.
Earlier, a committee under the DoT had suggested that the proposed three-year lock-in period on the equity stake held by promoters of a telecom company should be imposed only on the new licences issued and not on any existing player.
TRAI’s suggestions
However, the DoT has gone with the suggestions made by TRAI (Telecom Regulatory Authority of India) on imposing a three-year ban on equity sale by promoters of the companies that had recently taken licences.
The new rule will have no impact on any of the new players including Unitech Wireless or Etisalat DB as the promoters had issued fresh equity to bring in foreign partners.
Source: The Hindu Businessline