After over a year and a half, the merger between Etisalat DB Telecom India and Allianz Infratech has been rejected by the department of telecommunication (DoT) referencing a new rule that requires a three year lock-in period on equity stake for new telcos, DNA reports. We haven’t been able to locate on the DoTs website, the order that DNA references in its article.
The New Rule
A new clause was added as an amendment to the UAS license agreement on 23rd July 2009, which stated that no equity stake greater than 10% can be transferred until the company completes of three years from the effective date of receiving the UAS license or until fulfillment of all the rollout obligations. This is the right move.
Allianz Infratech also had its share of controversy – it was given licenses for just 2 out of 22 circles around six months after other new telcos were given licenses, and, within 2 months there were reports of it being bought by Etisalat DB (then Swan Telecom). Almost exactly a year ago Swan Telecom (now Etisalat DB Telecom India) and Allianz Infratech had announced their intent to merge.
What we know of Allianz is again meagre and obscure – it is promoted by Ajay Singh (a SpiceJet promoter), Ashish Singh, Praveen Singh and broadband entrepreneur Ashish Deora, who also heads IOL Netcom. IOL Netcom is an IPTV and Internet service company that witnessed losses of Rs. 140.5 million in FY09. Deora and Ajay Singh are also joint owners of Argentum Motors. Sucheta Dalal has a detailed article here on Deora, his alleged involvement with Pramod Mahajan and Reliance Infocom and Allianz Infratech.
Swan, which had just recently sold 45% of its stake to UAE-based Etisalat, held licenses for 13 out of 22 circles in the country from January 2008. In July 2008, Allianz Infratech was granted unified access service (UAS) licenses for critical circles which Swan did not own -Bihar and Madhya Pradesh. Neither Swan nor Allianz have begun rolling out their networks.