Cartel control: DoT to bar telcos from cross holding stakes

New Delhi: To end the possibility of formingcartels in the telecom sector, new telecom licences are proposed to come with a clause that will bar service providersfrom holding either direct or indirect stake in other telecomcompanies providing services in the same area.

“Removing cross holding is required to break cartelsamong (telecom) companies. They (established players) are opposing new entrants,” a senior government source said here.

At present, telecom licence conditions allow a telecomoperator to hold up to 10 per cent stake in other telecom services providers.“This (bar of cross holding norm) should go to LawMinistry for legal vetting within a week,” the source added.

In a recent communication to DoT, Comptroller and AuditorGeneral has alleged cartelisation by telecom players behind the failure of recent spectrum auction and pointed finger atthe conduct of Airtel, Vodafone, Reliance Communications, IdeaCellular and Tata Teleservices in this regard.

On May 29, Reliance Communications wrote a letter toTelecom Minister Kapil Sibal in which it has opposed

restraining companies from cross holding stake in otheroperators as it “will tantamount to closing operations of Reliance Telecom” – a GSM arm of the company.

Vodafone also holds around 4 per cent stake in BhartiAirtel which is within the permissible limit.

However, it is not clear whether the new clause willapply on mobile tower companies where there is no such restriction at present. Telecom operators jointly hold morethan 10 per cent stake in mobile tower firm, Indus Towers.

In February, Bharti Airtel had said it was introducing anew business model for managing fixed line and DSL broadband networks, on the lines of Indus Towers.

PTI