Mumbai: Tata Teleservices could well lose its bid to acquire a license to operate long distance telephone service unless it falls in line with the FDI guidelines on telecom services. According to the FDI guidelines notified in November 2005, no Indian telecom operator can have a foreigner in key positions like the CEO or the chief financial officer.
Tata Teleservices has Daryl Green, an Australian, as its CEO. However, the company said it is yet to receive any direction from the department of telecommunications (DoT) in this regard.
The DoT had put the Tatas' application for long distance licence on hold earlier as it was found to be incomplete. DoT had sought clarification on the foreign direct holding in the company and also on the issue of having a foreigner as its CEO.
While the government had given telecos time till October 2 for complying with FDI guidelines, the DoT wanted companies applying for a fresh telecom service licence to comply with the new guidelines.
Tata Teleservices has clarified on its equity holding pattern in the company but is yet to respond on the foreign CEO issue.
Tata Teleservices, meanwhile, is investing Rs500 crore countrywide. The company also plans to increase its subscriber base from the present 2.1 million to over three million by the year-end.
The money would be used for offering value-added services and for expansion in the Mumbai and Maharashtra circles.
Tata Teleservices has moved the Securities and Exchange Board of India (SEBI) for the company's right issue of Rs500 crore and is awaiting a letter of offer from the market regulator.
Sources said the company's revenues were affected because of the royalty of CDMA handsets. Tata Teleservices may also unify all the three companies TTML,VSNL,Tata Teleservices Limited.