Trading blows

Feb 23: The Tatas and the Birlas are at war.

The battle between the two industry titans has broken out over Idea Cellular ? the GSM service provider in seven telecom circles, including Maharashtra, Gujarat and Delhi ? in which the Birlas have a stake amounting to a little over 50 per cent. The Tatas own just under 49 per cent.

The spat broke out after the AV Birla group wrote to the Union communications ministry asking it to intervene and direct the Tatas to bring down the stake in Idea Cellular to below 10 per cent in accordance with the existing licence conditions.

The Tatas have sought time to roll back their stake and are holding out for a fair value.

The Tatas have another telecom company ? Tata Teleservices Ltd, a CDMA operator. The current licence conditions specify that “no single company/legal person, either directly or through its associates, shall have a substantial equity holding in more than one licensee company in the same service area for ... basic, cellular and unified access service.” There was a rider in the clause: “Substantial equity herein will mean an equity of 10 per cent or more.”

The new rules were framed in June 2004 when the unified access service regime came into force.

The Tata group said no regulatory compulsion should be imposed on it as it “needed sufficient time to reduce its holding at a fair value”.

A PTI report said AV Birla group chief Kumar Mangalam Birla met telecom minister Dayanidhi Maran and his secretary J.S. Sarma last week to discuss the issue. Sanjeev Aga, a director in Aditya Birla Nuvo Limited (ABNL), termed the meeting between Birla and Maran as a “courtesy call”.

In a letter written to Sarma, the ABNL official said: “We are compelled to seek your intervention to ensure the swiftest adherence to the conditions of licence.”