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Instead
of battling it out in the mar-ketplace against competitors,
the major shareholders of two telecom companies have been
fighting among themselves. While the Tata-Birla scuffle (which
is a fight among the promoters of Idea Cellular in order to
gain greater control over the company) has ended recently
with the Birlas buying the Tatas' entire stake in the company,
the fight of the Ruias of Essar (which has stirred up a hornet's
nest over the sale of Hutch's stake to Orascom, an Egyptian
company) still continues. Apart from the commonality that
is obvious from the two cases that the shareholders are trying
to better their financial prospects by increasing their stake
in the now lucrative telecom business, another striking similarity
is that both had asked for government intervention instead
of solving it among themselves. These disputes have raised
questions about Indian telecom policies, which according to
markets, are outdated, contradictory and vague.
The
crux of the Birlas' argument was that Tatas hold more than
10% stake in Tata Teleservices and at the same time hold 32%
of Idea Cellular which, according to Indian telecom policies,
is illegal. The Birlas cited the Unified Access Service License
law (UASL) of the Indian telecom policy, which states that
"no single company or legal person, either directly or
through its associates shall have substantial (10% or more)
equity in more than one license company in the same service
area". They asked DoT to intervene and order Tatas to
exit Idea. In their defense, the Tatas argued that there is
no single legal entity called the Tata Group. They said that
it is the Tata Industries that hold 32% stake in Idea Cellular
while holding only 4% in Tata Teleservices. |
