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07-07-2013, 02:37 PM #1
Vodafone favours cross-holding norms to protect stake in Bharti
Vodafone India has written to the department of telecommunications (DoT) for retaining existing cross-norms. Vodafone, which holds over four-per cent stake in Bharti Airtel, said that any change in the norms could hurt company's finances.
Currently, telecom companies are allowed to hold 10-per cent stake in different entities offering mobile services in the same circle as per the existing Unified Access Service Licence (UASL) norms.
DoT is proposing to bar telecom companies from cross-holding and this is likely to impact the two major operators Airtel and Vodafone.
The move also aims to bring in transparency in the scam-tainted telecom sector.
Vodafone, which has 4.4 per cent stake in Bharti Airtel, may be forced to dilute its stake once the new order comes into effect.
DoT recently moved a proposal to bar telecom companies and their promoters from holding equity stake in another company which is a competitor in the same telecom circle. This revised clause would be included in the upcoming Unified Licensing (UL) regime, expected to come into effect from next month.
In a recent note, the DoT Committee on Unified Licensing has also defined who constitutes a promoter-a legal entity which holds 10 per cent or more equity in a company with operating permits. However, the government's affiliated agencies, financial institutions and scheduled banks will be excluded from this clause.
The proposal comes after the DoT committee recommended modifications. As per the DoT note, no licensee company or its promoters directly or indirectly can have any equity holding in another company who is a competitor in the same telecom circle.