Vodafone seeks liberal norms to protect Airtel stake

Image Source: www.vodafone.co.uk

Vodafone is quite worried about its 5 per cent of stake that it has in Bharti Airtel. Vodafone is worried that its stake may be affected by the new crossholding norms. This has led Vodafone to urge to the Indian telecom minister to ensure that the new crossholding norms would be liberal in the way that these allow telecom operators to hold a smaller stake in the rival’s organization till the time it is not distorting competition. Vodafone will suffer heavy losses and several  hassles due to this and thus resident Director of Vodafone has written a letter to the telecom minister for requesting his personal intervention in to the matter.
An internal Dot committee that had the responsibility  of working out new acquisitions and merger norms specifically for the telecom industry has proposed that any telecom operators that is holding any kind of equity in its competitor organization must be barred from holding it legally. However, the current norms enforce a maximum stake or equity of not more than 10 per cent in its rival.
Vodafone is requesting the committee not to change the current  settings and not apply barring on a telecom operator or the operator’s promoter an indirect or direct ”beneficial interest” in any organization of the same niche or service area. Some reports say that the definition proposed by DoT previously would have badly affected Reliance communication that is rendering its GSM services under another company name – Reliance Telecom in a few circles.
However, the Dot sources say, that the term “Beneficial Interest” was becoming ambiguous. A senior Dot Official said beneficial interest is not defined in the Competition act or the Companies Act, instead there was a specific declaration of this term – beneficial interest in the Companies Act.