DoT examines shareholding clauses in licence terms of BWA spectrum holders

DoT may also explore possibilities of possible amendments in NIA, if required

The Department of Telecommunications (DoT) is examining the clauses related to shareholding pattern in the Notice Inviting Applications (NIA) that it had issued for the auction of the Broadband Wireless Access (BWA) spectrum in 2010.

In a recent discussion, one of the officials at DoT has noted that the department should examine if there was any provision for change of shareholder or equity in the NIA.

According to the notice inviting applications (NIA), the successful bidder of he BWA spectrum should have at least 26% equity in the company, directly or indirectly. But, the DoT is also not sure whether the licensee needs to maintain the shareholding structure which it had submitted at the time of acquiring the licence for the entire period of the licence term.

The DoT official also sought clarification from other members on why the company as a licensee is liable for performance of the bid obligation, the shareholders of the company are not liable. DoT may also explore possibilities of possible amendments in the NIA, if required.

The issue came up, after Qualcomm has written to DoT seeking approval of its stake offload to Bharti Airtel. While Qualcomm had acquired the spectrum initially, the same was later sold to Airtel in phases.

Qualcomm Asia Pacific, which had a 74% stake in the venture, now holds just 6.55% equity, while Airtel acquired a 93.45% stake. At the time of buying the broadband wireless access (BWA) spectrum, the company was 13% owned by Global Holding Corp, and Tulip Telecom had a 13% stake, while Qualcomm Asia Pacific had the remaining 74% stake.

According to an earlier discussion, DoT is also not sure whether the licensee needs to maintain the shareholding structure which it had submitted at the time of acquiring the licence for the entire period of the licence term.

Not only Bharti Airtel, Mukesh Ambani-led Reliance Industries had bought a 95% stake of Himachal Futuristic Communications Ltd that had acquired BWA spectrum through auction.

NIA also noted that the licensee may, under intimation to licensor (here DoT), replace a promoter or promoters by another, as stipulated, if the Indian promoter acquires the foreign promoter’s stake and it may also transfer equity between Indian promoters or persons including Indian employees of the company.