Government introduces lock-in period for telecom firms

Government introduces lock-in period for telecom firmsThe Department of Telecommunications (DoT) has introduced a lock-in-period of three years for the telecom companies holding a UASL (Universal Access Service License).

The promoters of telecom firms can not sell their equity stakes before the stipulated period of three years or till the completion of roll out obligations. The clause will be applicable to promoters having 10 per cent or more holdings in the firm, for eligibility to get UAS license.

However, Unitech Wireless and Swan Telecom are not subjected to the lock-in, and can go for issue of additional equity shares.

T V Ramachandran, the Director-general of Cellular Operators Association of India said: "The decision has no real impact, as it does not stop deals like that of Swan or Unitech Wireless, which have brought in foreign partners through expansion of the equity capital. Even the new clause that they would not be allowed to give dividends is meaningless, because no telecom company gives dividends so soon."

Earlier in 2008, the Union government granted spectrum to about half dozen telecom players, and some of them started the business of selling it to other players, thereby leading to a huge revenue loss to the government.