Qualcomm, which has sold its stake in Wireless Business Services to Bharti Airtel, India’s largest telecom services provider by subscriber base, may face regulatory hurdles.
According to a recent communication of the department of telecommunications (DoT), the telecom ministry is discussing if the new shareholding structure would be permissible under the licence agreement.
Qualcomm Asia Pacific, which had a 74 per cent stake in the venture, now holds just 6.55 per cent equity, while Airtel acquired a 93.45 per cent stake. At the time of buying the broadband wireless access (BWA) spectrum, the company was 13 per cent owned by Global Holding Corp, and Tulip Telecom had a 13 per cent stake, while Qualcomm Asia Pacific had the remaining 74 per cent stake.
Qualcomm did not respond to queries from Business Standard.
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. According to the notice inviting applications (NIA), the successful bidder of he BWA spectrum should have at least 26 per cent equity in the company, directly or indirectly. While Qualcomm had acquired the spectrum initially, the same was later sold to Airtel in phases.
As there is no clarity in NIA, one official has noted that the department may consider submitting a proposal giving various opinions in the context of 100 per cent foreign direct investment is allowed in the sector.
In a separate deal, Mukesh Ambani-led Reliance Industries had bought a 95 per cent stake of Himachal Futuristic Communications Ltd that had acquired BWA spectrum through auction.
NIA also mentions 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.
The DoT has also sought comments from different members on whether there is a provision for change of shareholding pattern or equity structure of the licensee in the NIA. NIA notes the successful bidders are to hold a minimum holding of 26 per cent in the new entrant nominee internet service provider or unified service access licensee company at the time of acquiring the licence. In such cases, a successful bidder cannot be made liable for the performance of the bid obligations and an amendment in NIA to this effect shall be necessary.