The Department of Telecommunications (DoT) has reportedly stated that it may not rework Merger and Acquisition (M&A) guidelines, but will deal with the guideline related issues on a case-by-case basis. This comes after Reliance Communications announced that it is in discussion with Russia-based Sistema for a possible merger of their Indian telecom businesses through a stock swap.
The current M&A guidelines include a clause that requires a buyer to pay market-linked prices for spectrum that comes with any acquisition. According to operators, this clause is the biggest deterrent as it raises the cost of acquisition. Another clause in the M&A guidelines that discourage consolidation is the one that allows a merged entity to hold a maximum of 25 per cent spectrum allocated in a service area and 50 per cent in a particular band. This clause rules out M&A activity amongst larger Indian telecom operators.
DoT has also stated that it may not auction spectrum in new bands such as the 700 MHz spectrum band, unless telecom operators specifically make requests for the same. The Telecom Regulatory Authority of India had earlier told DoT to come up with a road map for auctioning 700 MHz spectrum, typically used for 4G services, before conducting spectrum auctions in March 2015.
