India Gives Nod to 100% Foreign Ownership of Mobile Telcos

(Image: Firstpost.com)

This sounds like good news for SingTel (SGX:Z74), Maxis (6012.KL) and other mobile telco companies that currently have partial stakes in the industry in India. This week, the country’s Telecom Commission has ruled that 100 percent foreign direct investment in the mobile telco sector should be permitted in India.

Up to now, overseas telcos have been limited to a general 49 percent holding – which can be bumped up to 74 percent with especial regulatory approval from the Foreign Investment Promotion Board (FIPB) – of an Indian telco as the country sought to protect its fledgling mobile industry.

Once passed into law, the door is open for foreign firms to buy out their joint-venture partners so as to wholly own their Indian networks. At present, Malaysia’s Maxis Communications holds the maximum 74 percent of Aircel; Norway’s Telenor has 49 percent of Uninor; Singapore’s SingTel holds part of Bharti Airtel; Russia’s Sistema holds 56.68 percent of Sistema Shyam Teleservices; and Vodafone UK has the majority stake in Vodafone India. Here’s how it all looks in The Economic Times’ useful graphic:

India’s mobile telcos have already attracted an approximate $13 billion in foreign direct investment since early 2000, and the relaxed rules could mean, some experts believe, a further $10 billion in investments in the sector in India in the long term from overseas firms.

National security is also a factor in telecoms infrastructure, so it’s not clear if, at some point in the future, a company might be blocked from 100 percent ownership on security grounds.

Greater investment in this capital-intensive industry might also boost India’s 3G roll-out, which has been taking off very slowly. In September last year, a mere 18 million of India’s 893.8 million phone users had subscribed to 3G data packages – that’s just 2 percent.

(Source: Economic Times; via MobileWorldLive)

(Editing by Willis Wee and Enricko Lukman)