Telecom M&A guidelines to be in place by Nov 1

The most awaited telecom mergers and acquisition guidelines which were expected to be released on Tuesday, will be released, in about next two weeks time, Telecom Minister Kapil Sibal said.

“It will take two weeks more” Mr. Sibal said when asked about status of the guidelines announcement.

He was talking to reporters on the sidelines of Assocham’s India Knowledge Summit here.

The Minister had last month said that the guidelines will be out by October 15.

As per the mergers and acquisition (M&A) guidelines in works, incumbent service providers participating in consolidation activities will have to convert their old licence to Unified Licence, sources said.

In the revised guidelines in process, a DoT panel on M&A has proposed one year time for completing transaction and exemption from cross holding norms that prohibits incumbent companies from having more than 9.9 per cent stake in competing firms.

The panel on M&A has noted that many telecom service providers are listed on stock exchanges and have to go through a long process to complete the deal.

In fact, under the norms for new Unified Licence regime announced last week, operators are barred from holding any stake in a rival company.

The guidelines that have been okayed in principle by Cabinet include expeditious approval to merger proposals of telecom companies if their combined market share is up to 35 per cent.

DoT will seek telecom regulator TRAI’s recommendation in case the resultant entity has 35-60 per cent market share.

Consequent upon the merger of licences, the total spectrum held by the resultant entity should not exceed 25 per cent 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 services), 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.