The Telecom Commission has recommended changes in the mergers and acquisitions (M&A) guidelines for the telecom sector with a view to remove the payment anomaly between operators holding single and dual technology licences.
According to the Telecom Commission, the proposed M&A guidelines are in favour of dual-technology holders when they acquire single-technology operators. Under current guidelines, an acquiring company must pay an adjusted market price for spectrum of the company acquired if it and the acquired company have received the spectrum by paying an entry fee instead of participating in an auction.
The Telecom Commission has stated that the guidelines imply that if a dual-technology holder acquired a single-technology operator, it would eventually have three blocks of spectrum but would have paid a market price for only one block. Dual-technology holders such as Reliance Communications and Tata Teleservices Limited were allocated two blocks of start-up spectrum against an entry fee for a block of 2.5 MHz for CDMA technology and another block of 4.4 MHz for GSM services.
On the other hand, if a single technology holder, such as Vodafone India or Bharti Airtel were to acquire a dual-technology operator, the acquiring company would also get three blocks of spectrum eventually, but would have to pay for two blocks of the spectrum held previously by the dual-technology operators.
An empowered group of ministers is expected to review and take a final decision on the changes suggested in the M&A regulations on November 22, 2013.
