India’s Telecom Commission backs full foreign ownership

India’s Telecom Commission backs full foreign ownership

India’s Telecom Commission, part of the country’s DoT (Department of Telecommunications), has proposed 100 per cent foreign direct investment (FDI) in the country’s telecoms sector according to The Economic Times.

Under current rules, foreign investors are limited to 49 per cent equity via the “automatic route” but can bump that up to 74 per cent if the Foreign Investment Promotion Board (FIPB) gives approval.

Should the Telecom Commission’s proposals be ratified, it would enable India’s foreign players to buy out their partners and raise money for the country’s telecoms sector.

“Experts” quoted in The Economic Times said the loosening of FDI rules could attract close to $10 billion worth of investment in the long term. The sector, according to the report, has attracted around $13 billion worth of FDI since early 2000.

Foreign players with investment in Indian operators include Maxis Communications (Aircel), Telenor (Uninor), SingTel (Bharti Airtel), Sistema (Sistema Shyam Teleservices) and Vodafone (Vodafone India).

Both Russia’s Sistema and Norway’s Telenor, quoted by The Economic Times, welcomed the proposed change in FDI rules.

Coinciding with the Telecom Commission’s proposals, Telenor announced the Indian government had given it the green light to raise its stake in its Telewings joint venture (which operates under the Uninor brand) from 49 per cent to 74 per cent. Telenor had gained FIPB approval to raise its stake on 14 June.

According to the International Business Times, Telenor will pump around $170 million into India’s telecoms sector as a consequence of raising its stake.

In another reshuffling of telecom ownership in the country, Bharti Airtel announced on 4 July it had become the majority shareholder in its wireless broadband joint venture with Qualcomm by increasing its stake by 2 per cent. Bharti now holds 51 per cent and Qualcomm 49 per cent.

Bharti Airtel said the four separate entities that are part of the broadband venture have become its subsidiaries after the stake increase.

No financial details of the transaction were disclosed.