IndiaWatch: Game-Changin' Days

It’s been a day of upheaval and uncertainty in India's telecom sector as investors mull a new missive from the regulator, ponder some stock sales, and eye up some IT assets.

TRAI rattles lock-in keys
The Telecom Regulatory Authority of India (TRAI) has recommended that a three-year lock-in period be imposed on the operators that received Unified Access Service Licenses in January 2008. (See TRAI Recommends Lock-In.)

That means shareholders in Datacom Solutions, Loop Telecom, S Tel, Swan Telecom, and Unitech would not be allowed to sell their holdings in those operators until 2011 without incurring significant penalties. (See Indian Gov't Grants Mobile Licenses and India: Licensed to Thrill.)

TRAI confirmed to Light Reading that the restrictions apply to both equity shareholders that were part of the approved license application, and any company that has subsequently acquired a stake in the company from an original equity holder.

That means the likes of Telenor Group (Nasdaq: TELN), which is set to buy a 60 percent share in Unitech and inject $1 billion into the Indian business this year alone, along with Bahrain Telecommunications Co. (Batelco) , Etisalat , NTT DoCoMo Inc. (NYSE: DCM), and Sistema JSFC (London: SSA), would be bound by any lock-in restrictions. (See IndiaWatch: Telenor Still Committed, Etisalat Buys Into India, IndiaWatch: Batelco Buys Into GSM Startup, Sistema Adds to Shyam Stake, and Shyam Gets New Name.)

However, investors bringing new capital into the operators will not be subject to the lock-in condition.

Any company still wishing to sell its stake in an operator can do so on the fulfillment of network rollout requirements, but will have to put 50 percent of any profit earned from the sale into a special reserve. This money can then only be used by the operator for network expansion.

The new restriction has been introduced because the country's Department of Telecommunications wants to ensure that the unprecedented growth of the Indian mobile market is not disturbed by what it refers to as "fly by night operators making a windfall gain." (See Action in India and India Adds 15M Mobile Subs in January.)

This fear has developed as the license fees paid in early 2008 were actually set seven years earlier when the perceived value of the Indian mobile market was much lower, establishing the real possibility of making significant profits through quick sales.

Bharti slumps on CEO sell-off
India’s largest mobile operator Bharti Airtel Ltd. (Mumbai: BHARTIARTL) saw its share price fall Thursday by more than 6.3 percent to 550.3 Rupees after it emerged that CEO Manoj Kohli had sold his entire stake in the company, 123,000 shares, during the past week.

Kohli issued a statement to the Bombay Stock Exchange saying he had sold the shares “for personal reasons” and noted that he still held 180,000 share options in the operator. He added: “I am happy to confirm that I continue as CEO and Joint Managing Director of the Company.”

As news of Kohli’s stake sale became public, the carrier announced a change in its management structure, with the current president of mobile services, Sanjay Kapoor, being promoted to the new post of deputy CEO, in charge of the mobile and fixed line services units, including fixed broadband and DTH TV services. (See Bharti Airtel Shuffles Execs.)

Kohli, meanwhile, is to "increasingly focus on strategy development, governance and organisation development," the carrier noted.

Three prep bids for Satyam
Three companies, including OSS and telecom applications specialist Tech Mahindra Ltd. , have registered their interest in bidding for a 51 percent stake in troubled IT services firm Satyam Computer Services Ltd. (NYSE: SAY). See this Bloomberg report for more details. (See Action in India and IndiaWatch: Money Matters.)

— Catherine Haslam, Asia Editor, and Ray Le Maistre, International News Editor, Light Reading

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