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FIPB defers Verizon's equity transfer proposal

October 22, 2009 03:18 IST
In another example of the growing focus on security in the telecom sector, the Foreign Investment Promotion Board has asked whether US-based Verizon Wireless operates in Pakistan, while deferring its proposal for transfer of equity shares.

Verizon Communications India Pvt Ltd had applied to FIPB recently for transfer of equity shares in itself held by one non-resident shareholder group entity to another. Verizon Asia Pacific Holdings Ltd wishes to transfer 1,000 equity shares in Verizon India to Verizon European Holdings Ltd, UK, as part of a group restructuring. This proposal would not violate the 74 per cent cap on foreign investment in India, the company informed FIPB.

While approving investment proposals, FIPB checks if investments are coming from countries which are considered unfriendly to India. In a recent meeting, the Ministry of Home Affairs asked for deferment of the proposal, and the Department of Economic Affairs — while conveying its 'no objection' to the proposal — raised the issue that perhaps Verizon may have some operations in Pakistan. The FIPB comes under the Department of Economic Affairs.

Verizon, which operates in India through its joint venture with Videocon Group, holds national and international long distance (ILD) telecom licences in India. Verizon holds a 74 per cent stake in the JV, with the remaining 26 per cent held by Videocon. It has offices in Bangalore, Chennai, Hyderabad, Mumbai and New Delhi.

It also holds an internet service provider licence in India and has various local ISP facilities. Verizon received national long distance and ILD licences in India in 2008. In Pakistan, it provides voice and data services.

However, the government had earlier approved investment proposals by Norway's Telenor and the US-based Telcordia. Both these have operations in Pakistan. Telenor offers GSM-based mobile services in Pakistan, while Telcordia has implemented mobile number portability there. Telcordia has also been awarded a licence to implement mobile number portability in one zone in India.

Telenor has a joint venture with India's Unitech Wireless. The company has been given licences to offer mobile services across the country. Telenor has a 49 per cent stake in the JV. Early this week, the company received FIPB's approval to increase its stake in the JV to 74

Mansi Taneja in New Delhi