Source: The Economic Times, Oct. 31, 2013
NEW DELHI: The government expects to bring a “liberal” merger & acquisitions policy shortly which will enable much needed consolidation in the telecom industry and encourage greater investments by those keen to grow in the sector, telcom minister Kapil Sibal told ET.
“The merger and acquisition policy will be announced very soon, the last legs of policy framework are being finalised and once that is done you will get to know what they will be,” said Sibal on the sidelines of the launch of ETTelecom. com, a news portal dedicated to the telecom industry. Sibal had earlier said that he expects the M&A rules to be out by November 1.
The telecom industry, emerging from a bruising tariff war amid intense competition, has long sought rules that will spur consolidation. The industry has said that India’s market can at best accommodate five to six players. Currently, some of the country’s 22 circles have more than 10 operators.
On October 22, ET had reported that the government is planning far-reaching changes to rules on mergers and acquisitions in the fragmented telecom industry which could pave the way for bigticket deals. The most significant of the revisions from previous drafts is raising the limit on the market share of a merged entity in a circle to 50% from 35% earlier, which would have effectively prevented companies such as No. 1 Bharti Airtel from acquiring rivals.
The telecom department (DoT) has also decided to allow a merged entity to hold up to two blocks of 3G and broadband wireless access (BWA) spectrum as against one block each currently. However, despite industry opposition, DoT has stuck to its stand that companies will need to pay market price for the additional spectrum they get through acquisitions.
“The market will decide what the consolidation will be like and operators will decide on what the market can absorb,” Sibal added. The minister, however, declined to comment on controversial issues of spectrum pricing and auctioning of bandwidth in the 800 MHz band which is typically used by CDMA operators.
While the sector regulator has recommended slashing the floor price of spectrum in the 1800 MHz and 900 MHz bands by as much as 60%, and suggested that auctions shouldn’t be held for airwaves in the 800 MHz band for lack of demand, the telecom department is yet to take a decision on it.
The Telecom Commission, the highest decision-making body in the DoT, was expected to have met on Tuesday to take a call, but the meeting has been postponed until next week.
“We will take a decision as soon as possible. The decision will go to the Empowered Group of Ministers that will then take a call, which will be communicated to the Cabinet,” Sibal said.