Telecom mergers and acquisitions details by month-end: Sibal

Some of the mobile phone service providers expected to go for consolidation once the final guidelines are in place

The government plans to announce the long-awaited mergers and acquisitions guidelines by this month-end, paving the way for consolidation in the telecom sector.

“I am sure before July 31 the guidelines will be in place,” Law and Telecom Minister Kapil Sibal said on the sidelines of Assocham’s roundtable on the legal system.

The sector has 13 mobile phone service providers, with some of them expected to go for consolidation once the final guidelines are in place. “Telecom operators are talking to each other. There are three Indian service providers that are looking for significant stake sale but are waiting for clear guidelines,” said an executive of telecom company, who did not wish to be identified. Though the telecom ministry had announced broad guidelines for mergers and acquisition in February last year, detailed guidelines are yet to be be unveiled.

The guidelines accepted in principle include expeditious approval to merger proposals of telecom companies if their combined market share is up to 35 per cent.

It will seek sector regulator Trai’s recommendation in case the resultant entity has market share between 35 to 60 per cent. Government has de-linked spectrum from new licences and both have to be procured by companies separately.

Consequent upon the merger of licences, the total spectrum held by the resultant entity should not exceed 25 per cent of the spectrum assigned, by way of auction or otherwise, to it in the concerned service area in case of GSM spectrum services which include 900 and 1800 megahertz (MHz) bands frequencies.

In respect of 800 MHz band (CDMA) the in-principle approved guidelines state that the ceiling will be 10 MHz and for other spectrum bands, relevant conditions pertaining to auction of that spectrum will apply.