Bycell, Singtel Under Dot Lens

[@ksh@T 20]

NEW DELHI: The finance ministry has urged the home ministry and the Department of Telecom (DoT) to investigate the identity of the promoters of ByCell, a foreign company which has sought permission to hike its investment in the telecom sector. ByCell is a Switzerland-registered company, which is owned by Russian investors.

Last month, as first reported by ET, intelligence agencies had been alerted about this company after the Prime Minister’s Office (PMO) received complaints that identity of the investors of ByCell was not known.

ByCell, which heads the queue of telecom licenses, had obtained the Foreign Investment Promotion Board (FIPB) permission a year back to invest up to 74% in a telecom JV in India. The company has now put in a fresh application to with the FIPB to hike the quantum of investment. This is because, the company had earlier planned to invest $100 million over the next 3-5 years in 13 states across five telecom circles — Assam, Bihar, Jharkhand, North East, Orissa and West Bengal, but in September 2007 had applied for telecom licenses in all the remaining circles, thus requiring higher investments.

Intelligence agencies had pointed out that the only information provided to DoT by the company was that the holding company (registered in Switzerland) was owned by a group of individuals based in Russia and Europe. Therefore, security concerns addressed through Press Note 5 had been revived and officials had put the company under the scanner. The formal investigation by the government into the actual identity of the promoters may come as a blow to ByCell — as the company heads the queue for spectrum allocation (after existing operators) as it was amongst the earliest of applicants for telecom licenses in India.

Additionally, it was brought to the PMO’s notice that FIPB had cleared By-Cell’s proposal despite the DoT’s demand that more time was required to evaluate and study the Swiss company’s application.

The concern is that ByCell had applied to the FIPB in December 2005, but the company itself was registered in Switzerland only in August the same year. Security agencies had also pointed out that ByCell’s partner is Guntur-based Jayalakshmi group, whose primary focus in on tobacco products and spinning mills, and therefore did not have any expertise in telecom.