THE Foreign Investment Promotion Board (FIPB) has approved
Swiss-registered telecom company ByCell’s plans to invest over Rs 2,500
crore in India, a week after the firm, promoted by Russian businessmen,
dragged the government to court for failing to clear its application to
ByCell already holds letters of intent (LoIs) for launching mobile services in Assam, Bihar, northeastern states, Orissa and West Bengal, but the department of telecom (DoT) had withheld its licence for the past 15 months over its failure to obtain a formal clearance from FIPB, which is the nodal government body to clear foreign investment proposals in India.
ByCell CEO Alexandre Louzine said that the company was yet to get a formal communication on the FIPB clearance. But this paper has documents in its possession confirming FIPB’s clearance.
The decision brings ByCell, which plans to launch services based on the dominant GSM technology, one step closer to join an already-crowded sector dominated by the likes of Bharti Airtel, Vodafone and Idea. The company, which says it is already in advanced stages of network planning for its launch, is partnering Hyderabad-based Jayalakshmi Group, which has interests in tea, tobacco, cotton yarn and power and will hold 26% stake in the venture.
This is the third instance of ByCell obtaining clearance from FIPB. In January 2006, it had received the board’s permission to invest $100 million (Rs 500 crore) and launch mobile services in five circles spread across 13 states. Again in February 2008, it had obtained the board’s nod to apply for telecom licences in 17 circles and raise its investments in India to $500 million following clearances from the home ministry. But its application was sent back to FIPB again after security agencies and certain individuals raised concerns.
At the end of February this year, ByCell had approached the courts alleging that its licences were being withheld, despite DoT approving its application, collecting payments, bank guarantees and even issuing it with LoIs in early 2008. ByCell also pointed out that security clearances were being sought even after the board had approved the company’s application twice.
Speaking recently, ByCell executives had alleged that FIPB was trying to revoke its earlier clearances in a bid to hurt the company’s valuation and force its foreign promoters to sell out.
Fraught with controversy
THEY also alleged that the board was acting under pressure from certain individuals who wanted to buy out the telco. Last week, the Delhi High Court had asked the government to submit its reply to ByCell’s petition within four weeks.
ByCell’s application has been subject to controversy ever since the company announced its plans to enter the Indian telecom sector.
In January 2008, nine companies were given LoIs to launch services, but DoT held back ByCell’s application after a member of Parliament raised security issues. ByCell then said security clearances were held up due to “certain false complaints filed using the letterhead name of an MP in the Prime Minister’s Office in October 2007”. Later, ByCell produced documentary proof to show the MP’s clarification that his letter was a forged document. Following this, it was given LoIs, but not the licences.
Following this episode, the firm was in the news again, this time after the ministry of home affairs asked FIPB to seek additional information from the company, including passport numbers and bank account details of its investors. It was dragged into another controversy after the Indian embassy in Berne (Switzerland) informed the ministry of external affairs that ByCell Holding, the holding company of the telco, did not have an operating office in Geneva.
Last August, FIPB sent ByCell a questionnaire asking for more information on its promoters, which the company submitted the same month. ByCell executives say they have clarified all issues raised by the government on all occasions.
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