The government plans to announce the much-awaited merger and acquisition guidelines in the telecom sector by the end of this, paving the way for consolidation in the once starry but not the most distressed telecom sector, which is facing policy uncertainties and a Himalayan debt of Rs 2.5 trillions and declining revenues. "I am sure that before July 31 that policy will be in place, the guidelines for mergers and acquisitions," telecom minister Kapil Sibal said in the Capital Wednesday.
The telecom sector has at present around 13 service providers with some of them expected to go for consolidation once the final guidelines are in place. Telecom operators are talking to each other. There are three service providers that are looking for significant stake sale but waiting for clear guidelines. Though the ministry had announced broad guidelines for mergers and acquisition in February last year, detailed guidelines are yet to be unveiled.
The guidelines that have been okayed in principle include expeditious approval to merger proposals of telecom companies if their combined market share is up to 35 per cent. It will seek sector regulator TRAI's recommendation in case the resultant entity has market share between 35 to 60 per cent. The government has de-linked spectrum from new licences and both have to be procured by companies separately. Consequent upon the merger of licences, the total spectrum held by the resultant entity should not exceed 25 percent of the spectrum assigned, by way of auction or otherwise, to it in the concerned service area in case of GSM spectrum services which include 900 and 1800 megahertz (MHz) bands frequencies.
In respect of 800 MHz band (CDMA) the in-principle approved guidelines state that the ceiling will be 10 MHz and for other spectrum bands, relevant conditions pertaining to auction of that spectrum will apply.
