Telcos welcome TRAI's new M&A plans, says on right track

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Telcos welcome TRAI's new M&A plans, says on right track

A day after the telecom regulator's recommendations on spectrum pricing and M&A, the initial reaction from the telcos seems to be positive. Akhil Gupta, deputy group CEO and managing director of Bharti Enterprises told CNBC-TV 18 that TRAI's latest set of recommendations are balanced and forward looking, reports CNBC-TV18’s Malvika Jain.

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A day after the telecom regulator's recommendations on spectrum pricing and M&A, the initial reaction from the telcos seems to be positive. Akhil Gupta, deputy group CEO and managing director of Bharti Enterprises told CNBC-TV 18 that TRAI's latest set of recommendations are balanced and forward looking, reports CNBC-TV18's Malvika Jain.

Government can give permission for those M&A deals where the newly formed entity has 35% or less of market share, either in terms of adjusted gross revenue or subscriber base. But if the market share is between 35% and 60% it will be reviewed by TRAI.

While Bharti called it a pragmatic and progressive move, Gupta also said, "It is in the right direction, less regulation, more self regulation. On the M&A front, if you ask me, 60% is a very high limit."

With the overhang of the 2G licensing scandal still in the air, the government could use the recommendations to further consolidation in the sector. "I have not looked at the recommendations yet. We must make sure that the sector gets consolidated," said telecom minister, Kapil Sibal
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While Gupta added that the enablement towards more efficient use of spectrum is the key. "I am glad that the operators, the government, the regulator are all getting aligned towards that," he said.

Also, experts from PWC and E&Y agree that consolidation will result in greater sustainability for the telecom sector. "The price of the spectrum to be paid may actually act as a deterrent for operators planning a merger. Although the recommendation for charging a uniform licensing fee of 6% is positive, the move to bring infrastructure providers under licensing may not go down well with independent tower companies," said Prashant Singhal, telecom industry leader, Ernst & Young.