More Than Teething Troubles

Change of partners

Lure of the fast buck, differences between original promoters and a pressing need to raise funds has triggered the great Indian telecom sale. The rather hectic sale and buying of equity in cellular companies has attracted attention to the norms laid out in the tender documents for cellular and basic services. DoT had clarified that change of partners in bidding consortia was allowed if the original partners (whose operating experience and networth were taken into account during evaluation) held not less than 10 per cent for at least three years in the entity.

This norm was clearly violated in the case of Sterling Cellular, which is one of the cellular licencees in Delhi. Essar Telecom picked up the licence by buying Sterling Computers which held 51 per cent in Sterling Cellular. The US-based partner in the company, Cellular Communications International (CCI) sold its 10 per cent stake for $40 million and Swiss PTT came in. It is not clear who bought the stake, Essar or the Swiss company. In any case, the original foreign partner was completely replaced by another. Strangely, DoT under Sukh Ram had cleared the change then.

In the second case of its kind, Modicom Networks was also allowed a change of foreign partners, Vanguard Cellular and Telecom International of Thailand. Both the foreign investors were replaced