Post merger, telcos will have to surrender spectrum beyond prescribed limit

Companies will get one year for the same

The long-awaited merger and acquisition (M&A) guidelines for the telecom industry are unlikely to bring cheer for the telecom operators.

The Department of Telecommunications (DoT), in a recent discussion, has noted that telecom operators will have to surrender airwaves beyond the Government prescribed limit if the merged or resultant entity’s spectrum holding crosses the limit.

For this, companies will get one year, and the merger of licences will be restricted to the same service area. Also, the merged entity will have to migrate to the new Unified Licencing regime.

According to a recent discussion, the Government will allow merger up to 35% market share of the resultant entity through a simple, quick procedure. Beyond this, merger and acquisition proposals will be considered case-to-case basis. However, the companies should not breach the 25% cap on GSM spectrum or 10MHz for CDMA spectrum holding in any service area.

DoT will consider recommendations from the Telecom Regulatory Authority of India (TRAI) if the market share of the merged entity goes up to 60%. But, if the market share crosses 60%, mergers will not be allowed.

However, the cap for spectrum holding for the merged entity will be 25% of the total spectrum assigned and 50% of the spectrum assigned in a given band, by way of auction or otherwise, in the concerned service area in case of 900MHz and 1,800MHz bands, and the ceiling for the 800MHz band will be 10MHz, it noted.

This will impose severe restrictions for the GSM operators for possible mergers. The top three GSM operators – Bharti Airtel, Vodafone India and Idea Cellular together hold about 54% market share, according to TRAI data.

The internal discussion also noted that the merged or resultant entity shall be entitled to only one block of 4.4MHz of spectrum in GSM band or 2.5MHz in CDMA band for the entry fee paid. The discussion has referred to a previous decision of the Telecom Commission on this.

The Government will have the sole power to take action against non-compliance or non-surrender of spectrum beyond the prescribe limit.

On the other hand, the draft policy does not allow spectrum sharing or trading, something the industry is awaiting for a long period.