DoT may allow Etisalat, Allianz Infra merger

The telecom ministry is likely to allow Etisalat DB Telecom (earlier known as Swan) to merge with Allianz Infratech, making it the first acquisition among new telecom operators who were given licences in 2008.

The current rules prohibit sale of promoter’s equity in telecom service providers for three years after bagging the licences. However, both the companies had applied for a merger before the new regulation came into force.

“The matter has been discussed. The concerned authorities and they stated that now the transferee company (Etisalat) has fulfilled all the requirements of transfer. Accordingly, DoT may proceed with the appropriate Act at their end, as there appears to be no legal objection to such transfer,” said sources in know of the development.

They, however, clarified that permission has not been given yet but it may come soon.

Earlier, the government had blocked the proposed merger between Etisalat and Allianz, citing the three-year lock-in requirement under current rules. Sources, however, point out that this may open a Pandora’s Box as many new operators, who could not start services within the stipulated time period, may resort to this route to merge with other operators.

DoT came out with a regulation in July 2009, imposing a three-year lock-in period after some of the new telecom licensees sold stake to foreign firms soon after they got spectrum in 2008. Etisalat DB Telecom and Allianz, which entered the local telecom market in 2008, had applied for merger in early 2009, before the regulations came in.