The government will unveil the much-awaited guidelines for mergers and acquisitions in the telecom industry in about 10 days, Telecom Secretary MF Farooqui told reporters yesterday.
Experts say once the guidelines come into play, it would usher in a wave of consolidation in the Indian telecom industry that has -- after a decade of supercharged growth -- witnessed profitability come off amid intense competition.
Also read: Bharti Airtel buys Loop Mobile, to get 3 mn subscribers
Among key points that will find their way into the M&A guidelines, according to several media reports, are:
- When a telecom company takes over another company, the merged entity cannot have more than 50 percent market share at the time of buyout. If a company exceeds the threshold organically, it will be given a year to bring down its market share following which action will be taken against it.
- When a company takes over a rival that has acquired spectrum after paying an initial amount, the taking-over company will only have to pay the remainder amount for the spectrum, rather than the full amount as was the practice earlier.
- Telecom companies will now be allowed to sell excess spectrum that they hold to other companies. This will mean that the auction is not the only way companies can buy spectrum.
- Telecom companies can now extend their licenses by taking over other companies.
- The cap for maximum spectrum a telecom company can hold in any one circle will be at 10 Mhz each for the 800 Mhz and 2,100 Mhz bands.
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