Swiss PTT plans to hike stake in Sterling Cellular

Though the Indian government norms bar foreign companies to have a majority control in the private telephone network, sources say till the regulations do not change, Swiss PTT will officially have a 49 per cent stake.

Due to the liquidity crunch, Essar was in talks with the Swiss PTT since the last few months. Sources say a deal would be signed soon by both the companies.

With the fund infusion from Swiss PTT, Essar would be able to invest more on its basic telephone network coming up in Punjab.

The Ruias had taken over Sterling Computers, the holding company of Sterling Cellular, from the Chennai-based C Sivasankaran. At the time of takeover, Sterling Computers had already bagged the license to operate the cellular phone network in New Delhi.

Sources say Swiss PTT wanted a greater say in the management of the Delhi cellular phone network, and inject more funds to expand operations. The Swiss company also offered to invest funds into the joint venture which was to be equal to Essar contribution.

When contacted, Essar director, Prashant Ruia, denied any move by Swiss PTT to increase its stake in the joint venture. At present, Essar holds 51 per cent in Sterling Cellular, Swiss PTT holds 32 per cent and C Sivasankaran holds the remaining portion in the operating company of 17 per cent.

Essar’s 51 per cent stake in Sterling Cellular is routed through the holding company, in which Essar Investments holds over 90 per cent. Company insiders say Swiss PTT was keen to have a bigger say in the Delhi’s cellular operations, and, therefore, was keen on a higher stake.

Swiss PTT already plays the majority role in the running of the cellular services company as its nominees hold the key positions of CEO, chief operating officer, head-marketing and chief financial officer.

Swiss PTT is also looking at the possibility to pick up the Sivasankaran’s stake of 17 per cent in Sterling Cellular. In future, Swiss PTT is also interested in picking up a higher stake in Sterling Computers, the holding company of Sterling Cellular.

The Ruias have received approval from the Foreign Promotion Investment Board (FIPB) in December last year to offload a 24 per cent stake in Sterling Computers to three overseas bodies: Asia Pacific Bonds, Asia Pacific Alliance and Asia Pacific Markets, the special purpose vehicles, from which Swiss PTT will buy its stake.