Allianz Infratech, a firm which has license to launch telecom services is selling out to Etisalat-Swan combine. The deal could run into a few hundred crores and the companies have received clearance from the Department of Telecom (DoT), reports Economic Times. Allianz Infratech applied for a pan-India license but has permission to launch only in the Madhya Pradesh and Bihar circles although Etisalat-Swan, which has licenses to serve 13 circles, does not have a permit for these two circles.
While the DoT has granted an NoC for the merger, it has asked for a fresh proposal to be submitted by Etisalat-Swan combine after the deal is approved by the High Court or tribunal. The merger would enable the providers to cover a larger expanse since Etisalat-Swan will now get a 4.4 MHz of start up radio frequencies in Bihar and Madhya Pradesh.
UAE's Emirates Telecommunications Corp (Etisalat) bought a 45% stake in Swan Telecom for $900 million in September '08. Allianz has been promoted by SpiceJet promoters Ajay Singh, Ashish Singh, Praveen Singh and Ashish Deora, each of whom hold a 25% stake.
The deal will be the first complete sellout by any of the new telecom licensees.
While Unitech Wireless has sold a controlling stake of 67.25% to Norway's Telenor, Bahrain Telecommunications is the largest shareholder in S Tel with a 49% stake. S Tel which has licenses to operate in six states only may look to acquire more spectrums.
The Government and regulators were looking to take steps to lock-in promoters stake for three years on the new spectrums granted. The Telecom Regulatory Authority of India (TRAI) also suggested that promoters wish to sell their equity before the lock-in period may be allowed to do so if they agree to give 50% of the profit earned on the sale of such shares to the government. However, it is not clear if these will apply to this transaction as these measures are still under discussion.