DoT issues telecom merger and acquisition guidelines
Posted on Feb 20 2014 | IANS
New Delhi, Feb 20 : The Department of Telecom (DoT) Thursday issued the much-awaited guidelines for merger and acquisition (M and A) in the industry which said the merged entity's market share should not exceed 50 percent.
Market share will be determined by market share of both subscriber base and adjusted gross revenue of licence in the relevant market.
"In case the merger or acquisition or amalgamation proposals results in market share in any service area(s) exceeding 50 percent, the resultant entity should reduce its market share to the limit of 50 percent within a period of one year from the date of approval of merger or acquisition or amalgamation by the competent authority," said the guideline.
The guideline also said that the total spectrum held by the merged entity shall not exceed 25 percent of the total spectrum assigned for access services and 50 percent of the spectrum assigned in a given band in the concerned service area.
Industry players were upbeat about the guidelines. "These guidelines were much awaited. It is in the right direction. It is only that we want to get some more clarity regarding the spectrum usage charges (SUC) on how that will be applicable to the M and A regime," Rajan S. Mathews, director general, Cellular Operators' Association of India, the GSM operators' organisation, told IANS.
Commenting on the guidelines, Mahesh Uppal, director of a telecom consultancy firm Com First, told IANS that they are "broadly positive" and "overall more flexible than the previous version."
"However, this flexibility is somewhat reduced by the requirement that the merged entity cannot have more than 50 percent of total revenues in any service area," he said.
According to the guidelines, the buyer company at the time of merger shall pay to the government the differential between the entry fee and the market determined price of spectrum from the date of approval of such arrangements by the national Company Law Tribunal or Company Judge on a pro-rata basis for the remaining period of validity of the licences.
A time period of one year will be allowed for transfer or merger of various licences in different service areas in such cases subsequent to the appropriate approval of such scheme by the tribunal or company judge.