The Telecom Regulatory Authority of India (TRAI) is of the view that the mergers and acquisitions (M&A) norms require modifications by the government to facilitate consolidation in the industry. The regulator has argued that in other countries there are four-five telecom service providers, while the Indian market comprises 12 telecom operator. Further, due to large number of existing telecom operators in the industry, new entrants are in weak financial conditions. Thus, the country?s telecom market is in need of consolidation.
Meanwhile, Vodafone India had stated that companies be allowed to buy particular assets of a target firm such as spectrum rather than the entire company, which has debt in its books.
The Department of Telecommunications has finalised the M&A guidelines, which are awaiting approval from the cabinet. As per the guidelines, the two companies would be allowed to merge if their combined subscriber and revenue market share is up to 50 per cent. Also, the merged entity would be allowed to hold up to 50 per cent of the overall spectrum in a particular spectrum band in a service area while its total spectrum holdings across all bands should be up to 25 per cent in a service area.
