Wednesday, February 7, 2007

BT Telecom India acquires Mumbai-based i2i Enterprises; faces regulatory challenges

BT Telecom India is acquiring Mumbai-based i2i Enterprises for an undisclosed amount. i2i is an internet protocol-based global managed network service provider. With this acquisition, BT also gets to acquire i2i's four licenses for NLD, ILD, ISP and IP Telephony services, in addition to a 200-strong workforce and gross assets worth $22.5 mn. BT Telecom India is a JV between British Telecom and Jubilant Enpro of New Delhi,

The acquisition makes BT Telecom India's biggest foreign global carrier. However, the acquisition faces certain regulatory challenges. BT has already signed LoIs for its own NLD / ILD licenses and also has paid up the license fees and bank guarantees. In the light of these facts, the deal attracts regulatory scrutiny on many fronts, especially guidelines that restrict a company from cross-holdings across identical licenses in same service areas, either via an equity deal or acquisition. This means a company cannot hold two ILD or NLD licenses. Also there is no known precedent of a refund of license fees to any company, implying that BT may have to forfeit Rs. 5 crores it paid as license fees along with performance and financial bank guarantees if it abandons its LoIs.

Additionally, i2i is required to seek written consent of the licensor of their NLD / ILD licenses before it either directly or indirectly assigns or transfers its licenses to a third party or enters into an agreement for sub-license and / or partnership relating to any subject matter of license to any third party. BT Telecom India management say that they will examine these issues.

Read the article in Business Standard and The Times of India.

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