Telecom operators want lock-in policy relaxed

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De-linking favoured

BK Syngal, former Chairman of VSNL and currently Senior Principal with Dua Consultants, said that the present M&A policy is restrictive.

"It was a cover-up for the government's wrong-doings in the distribution of spectrum on the basis of the first-come-first-served (FCFS) policy and subscriber-based criteria (SLC). The present M&A guidelines were drafted keeping in mind bundling of spectrum with the UASL (Universal Access Service Licence) and further assignment of spectrum on the basis of much abused SLC . The idea was to put up a barrier against proxy entry/spectrum hoarding by existing licensees.

Moving forward, we suggest the de-linking of spectrum allocation and the UASL and doing away of restrictive M&A conditions to encourage consolidation."

Vodafone said that if the objective is to deter operators from seeking arbitrage gains in the future, then instead of a lock-in, a windfall tax should be considered.

Even new players such as Unitech Wireless and dual technology operators such as Tata Teleservices have backed the view.

High exit barrier

"The lock-in clause in the UASL agreement constitutes a high exit barrier for promoters, and therefore it is not conducive for consolidation. Due to constraints in spectrum availability in a particular band and release in dribbles, spectral inefficiencies are not allowing the full exploitation of the scarce resource; therefore there is an urgent need to achieve consolidation. Hence this exit barrier should be removed," Tata Tele said.

Taken from Business Line