DoT has already issued 15 notices to new telecom companies out of total 65 recommended by TRAI. All of them are the part of 122 licences which were identified by TRAI with respect to missing roll-out obligations and also ineligible to get a licence
New Delhi: The telecom ministry will seek legal opinion before cancelling some of new telecom licences, issued in 2008, for not starting services within stipulated timeframe as per norms, reports PTI.
“DoT (Department of Telecom) will seek opinion of the attorney general or solicitor general to come to a final conclusion to address some of the legal issues,” a senior DoT official said.
Last year, the Telecom Regulatory Authority of India (TRAI) had asked DoT to impose penalty and cancel as many as 65 new licences for not rolling out services within timeframe.
The telecom ministry has been issuing notices to firms on two issues—ineligibility to get licences and missing roll-out obligations within the stipulated timeframe.
“Our first goal is to send out the notices and then we will also seek the legal opinion from the law officers then try to put their replies and the legal opinion together to take a final action,” the official added.
DoT has already issued 15 notices to new telecom companies out of total 65 recommended by TRAI. All of them are the part of 122 licences which were identified by TRAI with respect to missing roll-out obligations and also ineligible to get a licence.
“We expect to send the notices any time now ... our goal would be to send them as soon as possible so that their replies come to us by end of December this year,” the official said.
The cancellations pertain to licences issued in 2008 by former telecom minister A Raja, who was sacked last year when his ministry was accused of selling licences and spectrum cheaply, allegedly costing the government billions of dollars in revenue.
The official also said that some of these 15 cases would be common with those who were ineligible to get licences and separate notices have been sent to these players on both counts.
The DoT has already collected over Rs300 crore as liquidated damages from various new operators for not rolling out services within stipulated time as per licence conditions.
According to the conditions, the operators have to cover 10% of the district headquarters within first year of allotment of spectrum. And after expiry of another 52 weeks, after claiming liquidated damages, the licences can be cancelled in case the services are not rolled out as per licence conditions. A final decision on this issue will be taken by DoT.
Gas utility GAIL and refiners IOC and BPCL have already informed ADB of their decision to exercise their Right of First Purchase/Refusal on the multilateral lending agencies stake. ONGC’s board on 4th November approved the share acquisition. The four the state-owned firms would need a government nod for buying ADB stake
New Delhi: After GAIL, IOC and BPCL, the board of state-owned explorer Oil and Natural Gas Corporation (ONGC) has approved acquisition of Asian Development Bank’s (ADB) stake in Petronet LNG (PLL), reports PTI.
ADB had on 23rd August offered to sell its 5.2% stake in PLL, in which the four state-owned oil and gas companies hold 12.5% stake each, sources privy to the development said.
Gas utility GAIL and refiners Indian Oil Corporation (IOC) and Bharat Petroleum Corporation (BPCL) have already informed ADB of their decision to exercise their Right of First Purchase/Refusal on the multilateral lending agencies stake.
ONGC board on 4th November approved the share acquisition, the sources said, adding that the four the state-owned firms would need government approval for buying ADB stake.
Gaz de France International (GDFI) holds 10% in PLL and also has first right over ADB stake. In case the French energy giant, too, decides to exercise its right, ADB’s 5.2% stake will split between the five in proportion to their current shareholding.
While Indian state firms would get 1.08% or 81.25 lakh shares each, GDFI would be eligible to 0.867%.
Sources said GDFI is unlikely to exercise its rights and if that happens, ADB's 5.2% stake will be split equally among the four promoters.
The price payable to ADB would the lower of either the average of the weekly high and low of the closing price of PLL during six months preceding the date of purchase, or the average of the weekly high and low of the closing price of PLL during the last two weeks preceding the date of purchase.
For 81.25 lakh shares, the consideration works out to about Rs120 crore, sources said adding the promoters, as per the new takeover code, would have to make an open offer for acquiring a further 26% stake from minority shareholders if they buy the shares in one transaction.
A staggered purchase may not trigger the open offer requirement.
Sources said the PLL’s constitution states that participation of PSUs would be to the extent of 50% and the joint venture company would not be a government company.
However, legal opinion taken by the promoters state that PLL would not be considered as a government company, following an acquisition of additional equity by the PSUs from ADB.
This is because neither of the conditions specified in Section 617 of the Companies Act would be met in case of PLL.
The conditions are at least 50% of the paid up capital of PLL should be held by central government or by one or more state governments; or PLL should be a subsidiary of a government company.
The immediate fallout of the acquisition would be that PLL would come under purview of government agencies like CAG, they said.
The state-run firms have argued that the acquisition of shares offered by ADB will result in securing controlling interests in PLL. As PLL has got long-term plans to increase its capacity in more locations additional investments in PLL will help the promoters in growth of gas business.
Also, on their initial investment of Rs99.37 crore, the promoters have been rewarded by dividend of Rs77.3 crore till date. Besides, the investment has appreciated many folds from Rs99.37 crore to Rs1,500 crore at current market prices.
Sources said the promoters had 60 days from receipt of notice of share sale from ADB to communicate their acceptance of the offer. The ADB communiqué was received on 14th September.
If the promoters had failed to convey the acceptance or waive their right of first purchase/refusal, ADB would have been free to sell its equity to a third party at a price and on terms not more favourable than contained in the offer.
As per the terms of offer by ADB, the promoters would be required to execute a sale purchase agreement and make payment of the entire purchase consideration with 30 days from the date of acceptance of the offer or receipt of necessary government approvals, whichever is later.
There was a possibility that in case the promoters decided to waive their right of first purchase, the entire equity stake being divested by ADB may be acquired by GDFI, thereby increasing its equity stake to 15.20% and making GDFI the single largest shareholder in PLL.
An ADB spokesperson had previously stated that “ADB has held a 5.2% stake in PLL since 2004. ADB always looks to exit its equity investments once it believes that the development mission has been accomplished.”
ADB had in fact first proposed to exit PLL in 2008 but the then company CEO Prosad Dasgupta was in favour of a third party like Chevron or the steel baron Lakshmi Mittal’s group buying the stake instead of the four promoters.
Sources said Dasgupta had on 29th February in that year written to the then GAIL chairman UD Choubey to say that sale of “even one share” held by ADB to the four promoters or Gaz de France (GdF) would trigger the takeover code, turn the joint venture into a state-run firm and may result in delisting from the bourses.
ADB and German Development Bank KfW had in 2008 approved a loan of $169 million to Petronet for its expansion projects at Dahej and new terminal at Kochi, but the multilateral lending agency’s internal norms prohibit it from having both debt and equity exposure in a company.
“In 2004, ADB had sanctioned $75 million loan to Petronet. But once it took 5.2% stake for less than $8 million, ADB could not disburse the balance due to its internal regulations,” a source said.
ADB norms also stipulate it to divest its equity holding in a company three years from the date of the company going public. Petronet’s IPO came in 2004 and ADB was supposed to exit Petronet in 2007, but was persuaded to stay on.
Wrren Buffett’s Berkshire Hathaway Inc. (BRK/A) invested $23.9 billion in the third-quarter, the most in at least 15 years, as he accelerated stock purchases and broadened the portfolio beyond consumer and financial-company holdings