HEADLINES
JOBS
COM:PORT
POLICY POLICE
ARCHIVES

Swisscom allowed to raise stake in Sterling Cellular

Swisscom officials, however, made it clear that actual allotment of shares would happen only after Swisscom is convinced of the financial viability of the company.

T O D A Y

• Reluctant Technologist • Global One pulls out • IT slowdown recorded • Swisscom deal

Sterling Cellular operates the Delhi cellular licence and controls Aircell Digilink, which operates cellular services in three circles - Haryana, Rajasthan and UP East.

It had been earlier announced that Swisscom would obtain approvals for raising its stake in Sterling Cellular to 49 per cent from the earlier 32.56 per cent.

Now the government has also granted an approval for 3 per cent of the equity in Sterling Cellular to be transferred from the Essar Group to Cellcom India Holding Private Limited.

According to the approval granted, Cellcom would be owned by Sphone Holding Private Limited (51 per cent) and Mobilvest, a wholly owned subsidiary of Swisscom (49 per cent).

Sphone would be promoted by Siemens with a foreign equity cap of 49 per cent.

With these approvals, the Essar holding, channelled through Essar Tele-Holding (formerly Sterling Computers), could be displaced from a majority 51 per cent to 48 per cent.

Swisscom has, however, made it clear that only approvals had been obtained, with no shares actually exchanging hands.

The CEO of Essar Cellphone, Erich Burkler, clearly said that there had been no actual cash inflow from Swisscom since the business viability case is yet to be clearly established.

If Swisscom decides against investing in further equity, the holding of Sterling Cellular would remain as follows: Essar Teleholding (51 per cent), TRL (16.44 per cent) and Swisscom, through Mobilvest, (32.56 per cent).

In the case of Aircell Digilink, the holding structure is as follows: Swisscom (through Mobilvest) 10 per cent, Essar Teleholding 10 per cent, with the majority 80 per cent held through Karthik Finance, a wholly-owned subsidiary of Sterling Cellular.

Therefore, control over Sterling Cellular would give Swisscom control over Aircell Digilink as well.

According to the industry report prepared by the Industrial Credit and Investment Corporation of India, Aircell Digilink had 17,210 subscribers across three circles as of March 1998.

The company incurred an operating loss (after payment of interest, licence fee and depreciation) of Rs 800 million for the year closing March 1998. The Delhi operator, Sterling Cellular, made an operating loss of Rs 280 million for the same year.

- Compiled from the Indian media

Tell us what you think of this story