Telecom operators want lock-in policy relaxed

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Telecom operators have urged the regulator to relax merger and acquisition laws to encourage consolidation in the sector.

In response to a consultation paper floated by the TRAI on spectrum and M&A policy, the operators said that 12-13 players in a single circle is not sustainable

"Looking at the prevailing market conditions, the consolidation in the telecom sector should be encouraged through relaxed regulatory policies. The existing guidelines stipulate that no merger between two companies can be effected until after three years from the effective date of the expiry of licence.

This restriction should be removed as it acts as a barrier to the consolidation within the telecom sector," Bharti Airtel said in its response to the paper.

Vodafone Essar said that lock-in imposed by the Government raises barriers to M&A and therefore consolidation and efficiency.

"While Indian operators have spectrum allocations that are generally less than half the international average, the lock-in prevents consolidation of significant amounts of spectrum. Currently, the lock-in period merely results in the wastage of considerable amounts of spectrum trapped in the hands of operators who are unlikely to have a sustainable business model (judging by the fact that no more than five operators have proved sustainable in any major international market)," Vodafone Essar said.

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