New Delhi: GSM cellular operators have requested telecom regulator TRAI to review the merger and acquisition guidelines, notified in February, so as to encourage consolidation in the sector.
"To facilitate consolidation in the sector, it is important that the M&A guidelines be reviewed and modified to promote orderly growth of the sector," Cellular Operators Association of India's Director General Rajan S Mathews said in a letter to TRAI Chairman Rahul Khullar.
"We request authority to initiate a suo moto consultation on M&A policy so as to enable a comprehensive review of the guidelines with participation of all the stakeholders," Mathews said.
In September, Khullar himself had said that there is a need to rework the M&A policy as the industry is cluttered with 10-12 operators and some companies are running heavy losses, which needs to stop.
The Department of Telecom in February notified M&A norms with relaxation in market share criteria. The rules now allow a merged entity to account for up to 50 per cent in terms of subscriber numbers and revenue, up from 40 per cent.
However, as per the rules, the acquiring company will have to pay the market determined fee for all spectrum allocated to the merged entity through administrative process under the old licensing regime.
COAI has said that this provision is one of the key deterrents to the consolidation process.
"It is important to review and put in place conducive M&A policy norms to provide impetus for consolidation in the sector. No M&A activity took place during the last 10 years under the various M&A policy guidelines issued by the DoT from time to time," Mathews said.
Under the TRAI Act, the regulator can suo motu or after getting reference from government on any sectoral issue come up with recommendations for formulation of rules or policies.
The Telecom Regulatory Authority of India had earlier, suo motu, started consultation process on spectrum trading and issued the recommendations in July.
The spectrum trading and sharing guidelines are expected to be notified by the end of this year.
This move is aimed at enabling industry to procure spectrum from the market instead of just depending on the government for auction or allocation of the radiowaves used for mobile telephony.
