The Department of Telecom has informed the Prime Minister's Office that Orascom's acquisition of 19.3 per cent equity in Hutchison Telecom International is not a security threat to the company's operations in the country.
Hutchison offers telecom services in India through a joint venture partnership with the Essar group.
The clean chit from DoT implies that Hutch Essar's IPO is back on track. Further, Hutchison Telecom International will not have to seek Essar's consent for Orascom Telecom raising its stake from 19.3 to 23 per cent as per the initial agreement between the two companies.
This is likely to lead to another development - DoT sources said the proposal to make it mandatory for foreign shareholders in Indian telecom companies to offer right of first refusal to the Indian promoter was now on the backburner.
This implies that foreign shareholders can sell their shares in the holding company without informing or getting the consent of their Indian partners.
DoT consulted the ministries of finance, defence, commerce and industry before taking a final call on Orascom, which offers mobile services in Algeria, Pakistan, Egypt, Tunisia, Iraq, Bangladesh and Zimbabwe.
Industry sources said Hutchison Essar had put its IPO plans on fast track and was likely to float about 10 per cent of the equity through a fresh issue. Sources added that the company had appointed Kotak Mahindra Capital for managing its public offer.
The size of the IPO is pegged at about Rs 5,000 crore (Rs 50 billion). Last year, Egypt-based telecom service provider Orascom Telecom had acquired 19.3 per cent stake in HTIL, which also gave the former a 12.19 per cent effective holding in Hutch Essar.
When contacted, senior Hutchison Essar executives refused to comment on the development, while adding that the "company's plans had never gone off-track due to the Orascom issue".
Orascom is reported to have recently exercised its right to raise its stake by 3.7 per cent to 23 per cent in HTIL. As a consequence, its stake in Hutch Essar will go up to just over 14 per cent.Do you want to discuss stock tips? Do you know a hot one? Join the Stock Market Discussion Group
