No luck on merger for Etisalat, Allianz

The department of telecommunications has nixed the prospects of a merger between two recent entrants into the mobile telephony market – Etisalat DB and Allianz Infratech, as such a merger would violate the conditions under which they got their licence.

The two companies were allotted operating licences in January 2008 conditional on a 'lock-in' period of three years. In what appears to be a speculative throw of the dice, they applied to the DoT this year seeking permission for a merger.

In its refusal, DoT cites a July amendment to the unified access service licence (UASL) issued in July this year, which says there should be a three-year lock-in period before any major equity transaction can take place among mobile service players.

Etisalat DB, formerly known as Swan Telecom, is a joint venture between Dubai-based Etisalat and the Mumbai-based realty firm Dynamix Balwas Group. Swan Telecom was awarded licence to operate in 15 circles in January 2008.

Its would-be partner Allianz has licences for two circles only. Allianz Infratech is promoted by four individuals - aviation entrepreneur Ajay Singh, Ashish Singh, Praveen Singh and Ashish Deora, who hold 25 per cent each in the company.

This is the first time that DoT has struck down a merger proposal based on the recently finalised lock-in period rule. The decision follows widespread flak that communications minister A Raja received over the stake sale by new telecom licencees such as Unitech and Swan to foreign firms Telenor and Etisalat respectively soon after getting spectrum.

The department had issued as many as 122 UAS licences to 10 telcos, of which seven were new while the remaining got additional licences across the country.