Does an operator need to be domiciled in the country? Are there any restrictions on foreign ownership of telecoms operators?

Technology (second edition)

Indonesia Small Flag Indonesia

Yes, telecoms operators need to be in the form of an entity domiciled in Indonesia in order to conduct business. There is a foreign ownership restriction of 67% for telecoms operators, i.e.:

a. fixed telecommunication network provider;

b. moving telecommunication network provider;

c. service-integrated telecommunication network provider;

d. telecommunication content service provider;

e. information service (call centre) and other value-added telephone service provider;

f. internet service provider;

g. data communication system provider;

h. internet telephone provider (for public purposes); and

i. internet interconnection services (NAP) and other multimedia services.

The Netherlands Small Flag The Netherlands

From a telecoms regulatory perspective, there are no requirements for a communications provider to be domiciled in the Netherlands prior to or during the provision of services, and there are no foreign ownership restrictions.

Brazil Small Flag Brazil

Yes. Under Decree No. 2,617/1998, any Brazilian telecommunications operating entity has to be (i) incorporated and headquartered in Brazil; and (ii) controlled by another Brazilian entity, also headquartered in Brazil. Despite, there are no foreign ownership restrictions in the telecommunications sector, except for radio and TV broadcasting, where foreign capital is limited to 30% of the company’s total and voting capital.

Luxembourg Small Flag Luxembourg

From a telecom regulatory perspective, there are no requirements for a communication provider to be domiciled in the Grand-Duchy of Luxembourg prior to or during the provision of services, and there are no foreign ownership restrictions. That said, there are general restrictions in place where necessary in the interests of national security, which could, theoretically, be used to restrict foreign ownership of certain telecoms operators, although this right is unlikely to be invoked.

Romania Small Flag Romania

The Romanian legislation in the sector of electronic communications does not require an operator to be established on the territory of Romania.

Under the Romanian legislation there are no foreign ownership restrictions with regard to telecom operators.

Spain Small Flag Spain

Any natural or legal person from or established in the European Union can provide ECS or ECN in Spain. Companies registered in non-EU or European Economic Area countries can only enter the telecoms market and provide services in Spain through bi- or multi-lateral agreements, conventions or treaties to which both countries are party. The Spanish government is free to make any exceptions to these rules and can grant direct authorisations.

Among other things, a foreign operator not belonging to the EU would need to present a certificate issued by the respective Spanish diplomatic representation stating that they are listed in their local professional, commercial or similar register or, failing that, that they act legally and regularly in the scope of the corresponding activities. Besides this, they must also identify in their notification the international agreement that enables them to operate networks or provide electronic communications services in Spain or, failing that, show agreement from the Council of Ministers who will authorise such documentation in exceptional circumstance.

India Small Flag India

Yes, any license required in the telecommunication sector will only be granted to an entity incorporated in India. However, 100% foreign ownership is allowed in the sector and investments of up to 49% are under the automatic route (which do not require approvals). 100% foreign direct investments (FDI) under the automatic route is allowed in respect of the OSP category.

Also, foreign nationals are restricted from participation in the management of telecom companies.

Turkey Small Flag Turkey

Yes, there are restrictions on foreign ownership of telecom operators. The principles and procedures regarding the authorisation of electronic communication services, networks and infrastructure are set out in both the ECL and the Authorisation Regulation.

Under the Electronic Communications Law, the applicant company must be founded under the legal status of either a joint stock company or limited company under the laws of the Republic of Turkey. This condition may be considered a restriction on foreign companies entering the telecommunications. Foreign companies can therefore only be founders or shareholders of companies incorporated subject to Turkish laws.

Sweden Small Flag Sweden

There is no need to be domiciled in the country.

There are no restrictions on foreign ownership of telecom operators.

Switzerland Small Flag Switzerland

Generally, no restrictions apply to operators not domiciled in Switzerland or companies owning interests in the electronic communications market in Switzerland. However, subject to any international obligations to the contrary, ComCom may refuse to grant a license to use the radio frequency spectrum to foreign-incorporated companies unless reciprocal rights are granted to Swiss companies under the relevant foreign laws. Foreign TSPs obtaining contractual access to the network services of a TSP in Switzerland enter the market as Mobile Virtual Network Operators (MVNOs). MVNOs do not need an operation licence as their network is based on the transmission frequencies of the licenced operators. In Switzerland, there are three suppliers of mobile network infrastructure and several MVNOs.

China Small Flag China

Foreign-fund telecoms operators are allowed to engaged in BTS and VATS in China through a Sino-foreign equity joint venture which is domiciled in China. According to the Provisions on the Administration of Foreign-fund Telecommunications Enterprises (2016 Revision), the foreign investment in a foreign-funded telecom enterprise which is engaged in BTS (exclusive radio paging services) shall not be more than 49%; the foreign investment in a foreign-funded telecom enterprise which is engaged in VATS (including radio paging business in BTS) shall not be more than 50%. Further, to fulfil China’s commitments to the WTO and to open up China’s telecoms industry, in 2015, the MIIT issued the Circular for Lifting Restrictions on the Foreign Equity Ratio for Online Data Processing and Transaction Processing Business to allow foreign investors to hold up to 100% equity interest in e-commerce operations nationwide in China. In the Opinions of MIIT and the Shanghai Municipal Government on Further Opening Up the Value-added Telecommunications Services in China, for app stores business, storage-forwarding business, call center services, domestic multiparty communications services and internet access services (providing access services for internet users), the foreign investment in Shanghai Free Trade Zone may be up to 100%; for domestic internet virtual private network (VPN) business, the foreign investment is subject to a 50% cap.

In addition, according to the Announcement of MIIT on Issues concerning the Provision of Telecommunication Services Provided by Hong Kong and Macau Service Providers in the Mainland, Hong Kong and Macau service providers may establish joint ventures or wholly owned enterprise to provide the VATS such as online data processing and transaction processing service (limited to e-commerce), domestic multi-party communications service, storage-forwarding service, call center service, internet access service (providing access services for internet users) and information service business (limited to application stores), and the proportion of Hong Kong-owned and Macau-owned equity is not limited. Further, Hong Kong and Macau service providers may establish joint ventures to provide the following VATS, but the proportion of Hong Kong-owned and Macau-owned equity shall not exceed 50%: online data processing and transaction processing service (excluding e-commerce); domestic VPN service, internet data center service; internet access service (exclusive providing access services for internet users) and information service (excluding application stores).

Some sectors of internet-related services are not open to foreign investment. In the negative list of the Catalogue for the Guidance of Foreign Investment Industries (2017 Revision), foreign investment is prohibited from engaging in internet news information services, network publication services, network video and audio programs services, internet culture operations (exclusive music) and internet public information distribution services.

Mexico Small Flag Mexico

Mexico’s federal constitution allows up to 100% foreign investment in the telecommunications and satellite industries up to 49% in the broadcasting industry.

The FTBA, however, mandates that sole concessions and radio spectrum and orbital resources concessions, and all authorizations, be issued only to Mexican individuals or entities. Mexican entities (that is, entities incorporated in Mexico), in turn, are in principle domiciled in the country. The rationale of this requirement is that IFT may have and assert jurisdiction over all holders of concessions and authorizations that render telecommunications services in Mexico.

Malaysia Small Flag Malaysia

Telecoms operators which carry out the functions of Network Facilities Providers, Network Services Providers, Applications Service Providers and Content Applications Service Providers will need to apply for an individual license or a class licence under the CMA. In order to be eligible for such licenses, in terms of domicile and foreign ownership, the licensee must be a company incorporated in Malaysia and the shareholding of the licensee company must comply with Malaysian foreign investment restrictions. With respect to market access, commercial presence in Malaysia is only established through the incorporation of local joint venture companies with Malaysian individuals or Malaysiancontrolled companies or through the acquisition of shares of existing licensed operators. Foreign companies (as defined under the Companies Act 2016) are generally ineligible for licenses under the CMA.

The Malaysian government had in 2011, announced the autonomous liberalisation of telecommunications services by allowing 100% foreign equity participation for Application Service Providers; and 70% foreign equity participation for Network Facilities Providers and Network Services Providers.

France Small Flag France

An operator is not required to be domiciled in France (i.e. to create a subsidiary, register a branch, or other) in order to operate a network or provide communications services in the country.

Pursuant to EU directives, each EU Member State must ensure that access to its telecom market is not unduly restricted. The ministry in charge of electronic communications and the ARCEP must nonetheless ensure that equivalence of treatment is respected regarding outbound and inbound traffic with foreign countries, including as concerns conditions of access to networks abroad.

Foreign investments in France may be subject to prior approval by the Ministry of Economy when pertaining to sectors that involve the country’s interests in terms of public order, public security or national defense, such as with regard to the integrity, security and operating continuity of electronic communications services and networks.

Germany Small Flag Germany

An operator is not required to be domiciled in Germany. But a domestic representative is requested.

Singapore Small Flag Singapore

In order to apply for an FBO or SBO licence, the applicant must be a company incorporated in Singapore.

A Singapore incorporated company may be wholly owned by a foreign entity. There is no restriction on foreign ownership for telecom licensees.

Australia Small Flag Australia

There is no requirement that a carrier or carriage service provider be domiciled in Australia. However, the Telecommunications Act provides that a condition of a carrier licence may relate to the extent of foreign ownership or control of the carrier, whether direct or indirect.

There are also further restrictions in place for Australia's dominant public carrier, Telstra. Foreign shareholding and participation in the activities of Telstra are restricted in a number of ways, including:

(a) limits on individual foreign ownership and total foreign ownership;

(b) that a majority of directors and the chair must be Australian citizens; and

(c) that head office, base of operations and place of incorporation must remain in Australia.

United States Small Flag United States

When a corporation is directly or indirectly controlled by another corporation, the FCC traditionally reserved the right to refuse to approve a licence if more than a 25% interest in the controlling company is foreign and if the Commission finds it in the public interest to do so. In 2013, the FCC announced a policy change that it would review foreign ownership above 25% on a case-by-case basis. There are additional restrictions on the nationality of management that apply in the case telephone companies having a common carrier radio licence. No license has been denied on the basis of foreign investment. Wireline common carriers are not subject to these restrictions.

The FCC may deny certain radio licenses to parent corporations with greater than 25% foreign investment only if the public interest is served by this refusal. When a foreign-organized company files an application with the FCC to provide US international telecommunications services, or to acquire control of an existing provider of US domestic or international telecommunications services, the FCC seeks the advice of US Executive Branch agencies with respect to national security, law enforcement, and foreign policy and trade policy concerns. In addition, the Telecommunications Communications Act of 1996 does not allow the FCC to grant a radio license to a foreign government. It also does not allow the FCC to grant a common carrier (or broadcast, aeronautical fixed, or aeronautical en route) radio license to a foreign individual or corporation, or to a US corporation of which more than 20% of the stock is owned or voted by foreign individuals, corporations or governments. However, where an applicant for a common carrier radio license has a controlling US parent with greater than 25% foreign investment, the Telecommunications Act of 1996 allows the FCC to deny the license only if the public interest is served by this refusal.

Japan Small Flag Japan

Under the Telecom Act, there are no regulations that require a telecommunications carrier (i.e., any person who has obtained registration or has filed a notification to operate a telecommunications business under the Telecom Act) to be domiciled in Japan.

Under the Act on Nippon Telegraph and Telephone Corporation, Etc., one-third or more of the total number of the issued shares of Nippon Telegraph and Telephone Corporation (NTT Corporation) must be held by the Japanese government, and the aggregate voting rights of shares in NTT Corporation held directly or indirectly by (i) any person who does not have Japanese nationality, (ii) any foreign government or its representative or (iii) any foreign juridical person or entity (subject to the calculation method of indirectly held voting rights under the Act) may not exceed one-third of the total voting rights of the issued shares of NTT Corporation. There are also certain restrictions on foreign ownership under the Radio Act and the Broadcasting Act.

Furthermore, certain direct inward investments into Japan (e.g., acquisition of 10% or more of a listed company in Japan or any shares of an unlisted company in Japan) by foreign investors in the area of telecommunications business are subject to a prior filing requirement under the Foreign Exchange and Foreign Trade Act and could be subject to order of the Japanese government to change or stop the transaction (although such order has never been reported in the area of telecommunication business in the past).

Updated: September 11, 2018