New Delhi, April 24: Rules for merger and acquisition in telecom, issued on Tuesday, allow foreign telecom companies to acquire a 74 per cent stake not only in an existing Indian firm but also in a new operator.

Current government policy allows foreign direct investment up to 74 per cent in existing telecom companies only. The government has now clarified that foreign investors can do the same in any of the new Indian telecom players.

“As far as acquiring a 74 per cent stake in telecom companies (whether new or old) is concerned, it is according to the foreign direct investment (FDI) rules of the ministry of finance and there is no change in it,” said department of telecom (DoT) officials.

While new telecom players cannot be bought by existing domestic players such as Bharti Airtel and Vodafone during an initial three-year lock in, foreign companies that do not own telecom licences here can take a stake in them during this period, officials added.

Industry analysts said the cash-rich foreign telecom firms are “very serious” about entering India and could use this route. Unitech, Videocon's Datacom and BPL Mobile's subsidiary Loop Telecom are among companies which have recently received start-up spectrum to launch mobile services.

AT&T has been talking to some of these companies for a controlling stake to re-enter the Indian mobile space, industry sources said.

Other foreign players such as Qatar Tele and Bahrain Telecommunications Company are in talks with Datacom, which has a pan-India licence and can start operations in 22 circles.

The DoT recently allowed 22MHz of spectrum to five new telecom licencees — Datacom Solutions, Idea Cellular, Unitech group, Swan Telecom and Loop Telecom in Tamil Nadu. The companies were allocated 4.4MHz of spectrum each to start operations. The companies have telecom licences to start operations on an all India basis.

Moreover, Datacom, Idea, Loop, Nahan Properties (part of the Unitech group) and S Tel have also received start-up spectrum in the Orissa circle. The DoT is also expected to issue start-up spectrum to the new players in Karnataka, Andhra Pradesh, Kerala, Maharashtra and Bihar.