Trai asks MTNL to form separate company for cellular services
New Delhi: In a bid to ensure a level playing field for all the cellular players in the country, the Telecom Regulatory Authority of India (Trai) has asked Mahanagar Telephone Nigam Ltd. (MTNL) to form a separate company for its cellular mobile services.

MTNL, which is presently laying cellular network in Delhi and Mumbai, is expected to launch its services by October.

Trai’s mandate to MTNL comes in the wake of private operator representing that, if MTNL is allowed to provide cellular services under the existing company, it will cross-subsidise the cellular services with the basic services.

The company’s entry into the cellular arena by using its existing infrastructure, at a time when private operators have paid heavily to use the MTNL and DoT infrastructure, is seen as an unfair advantage to the state-owned telephone company.

MTNL sources, however, say that there is no question of setting up a separate company as the licence for operating cellular services was issued to MTNL and it is not transferable to any other company. Further, the company claims that in Delhi and Mumbai, the two private cellular service providers have formed a cartel. As a result of this, the tariff for cellular services in Delhi and Mumbai are the highest in the country. The company contends that if it is forced to form a separate company, the cost of services may go up and ultimately the consumers may suffer.
Back to News Review index page  

Government to allow allotment of shares in lieu of cash to foreign companies
New Delhi: Departing from its earlier stand that ruled for many years, the government is said to be allowing the induction of foreign equity in Indian joint ventures in the form of man-years of work done by the foreign company for the joint venture. This would mean that Indian companies would now be able to allot shares to their foreign partners for the services rendered by the partners for the joint venture.

Till now, the government had permitted the adjustment of foreign equity against technical knowhow, royalty and capital goods but this would be the first time when business granted would be considered in lieu of foreign capital.

The landmark decision has been taken in the case of Jason Geosystems BV of the Netherlands, which is to get the equivalent of 90 man years of work in its joint venture, ITTI, in India. This would constitute a 6.9 per cent of the total paid-up capital of the company at a price of Rs. 114 per share.

ITTI is bringing in Jason Geosystems to carry on the business of development of software for use in various areas of activities, such as finance, financial services, manufacturing, distribution and transportation.

While the FIPB which approved the application was of the view that the mode of payment was a matter to be settled between the partners, the department of economic affairs had strongly opposed the move and recommended that such an induction should be rejected, or least the opinion of Sebi and RBI should be sought in the matter.
Back to News Review index page  

Stanchart said to be bidding for Hong Kong business of Chase Manhattan
London: Soon after spending nearly $1.3 billion to acquire the Grindlays banking operations from the ANZ group, Standard Chartered, now India’s largest foreign bank, is said to be in a billion dollar bidding war to buy Chase Manhattan’s retail banking business in Hong Kong. The British bank, which aims be a powerful player in Asia and the emerging markets, has bid around $1.6 billion to buy Chase’s Hong Kong branch network and its mortgage, consumer credit and personal loan businesses. Stanchart is already the second biggest bank in Hong Kong and hopes to become even bigger with this prospective acquisition.

Stanchart joins four other powerful rivals including Citibank, Singapore Development Bank, Hong Kong’s Bank of East Asia and the Singapore Overseas Bank, in the bidding process.

To fund its buying spree, Stanchart has raised more than 600 million from the international capital markets in recent months. It is also hoping to bolster its cash pile by selling a British-based subsidiary company Chartered Trust for around 600 million.

Chartered Trust, a profit making concern, is the group’s British consumer finance and contract hire business. However, Stanchart chief executive, Mr. Rana Talwar, is of the opinion that it is peripheral to the bank’s main interests in Asia and the emerging markets.
Back to News Review index page