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Why Did Allianz Infratech Get A Telecom License And Why Is Etisalat Being Allowed To Buy It?

swan-allianz-service-areasWhat was the point of Allianz Infratech being given a telecom license for two circles (Bihar and Madhya Pradesh) in July last year? The Economic Times reports the company is being acquired by Etisalat funded Swan Telecom, and that Etisalat has received a No-Objection-Certificate from the Department of Telecom. Note that we could not locate a copy of the No Objection Certificate on the DoT’s website.

Swan has licenses to operate in 13 service areas, and Noida based Allianz has licenses to operate in two. 

We’ve put up a complete list of telecom licensees by circle, here, alongwith their addresses and date when licenses were awarded.

We were surprised after Allianz became the only company to receive a telecom license after January 25th 2008, particularly since their initial application for a license was rejected earlier on the grounds that the companys net worth was lower than the mandated Rs. 1350 crores. Does that mean that the door is still open for other Telecom aspirants to apply for a license?

Given the valuations of new telcos – Unitech-Telenor, S Tel-Batelco and Shyam Sistema are cases in point – this is likely to result in a windfall for the promoters behind Allianz Infratech, after having paid only Rs. 30 crores for the two circles. This acquisition will give Etisalat funded Swan Telecom to expand its operations to two additional circles. Last year, Etisalat had picked up 45% in Swan Telecom for $900 million.

It is perhaps just a co-incidence that Swan Telecom was allocated the access codes 95 and 91 by the DoT, while Allianz Telecom has the access codes 95 and 96.

A few questions still remain unanswered:

— Based on what criterion were telecom licenses awarded to Allianz Infratech, or, for that matter, to any of the new telecom operators?
— Why were licenses awarded to Allianz Infratech in July-August 2008, and to no other applicants who had previously not met the net-worth criterion?
— Why is Etisalat-Swan Telecom being allowed to acquire Allianz Infratech when Merger & Acquisition guidelines have not been finalized by the DoT?

Perhaps we should file an RTI petition to get answers to these questions.

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