The Telecom Regulatory Authority of India (TRAI) has recommended increasing the limit imposed on the combined market share of merged entities, as well as the spectrum held by them.
The regulator has recommended that mobile phone companies could merge their operations if the combined market share of the new entity is less than 60 per cent, as against the current 40 per cent ceiling.
It is expected that theoretically, the new rules will allow any operator in the country to buy out any other player. Moreover, large telcom players would be able to buy out multiple smaller operators and new entrants, reducing the total number of players in the sector.
With its new recommendations, TRAI has reversed the proposal it put forward last year of reducing the combined market share limit to 30 per cent.
However, the Department of Telecommunications (DoT) had rejected this recommendation and had asked the regulator to review it.
Prior to this, TRAI had said that the combined entity could not hold more than 14 units of spectrum, but has now allowed the combined entity to hold up to 25 per cent of the total available spectrum in that region.
With regard to mergers and acquisitions, TRAI has said that the merger between two or more entities would be automatically approved, if the joint entity had less than 35 per cent market share.
The regulator said, “Those falling above 35 per cent and up to 60 per cent would require TRAI?s opinion on the merger. We will then carry out a detailed examination to ensure that there would not be any abuse of market dominance.? In this case, both revenue share and customer share should not exceed 60 per cent.
