Government allows mergers between telcos with up to 50% combined market share: Media Report

Subscribe to GoodReturns

Government allows mergers between telcos with up to 50% combined market share
In a bid to increase M&A activity in the crowded telecom sector, the government today eased rules by allowing mergers between firms with up to 50 per cent combined market share, PTI reported. Currently, telecom firms are allowed to merge if their combined market shares in terms of subscriber base do not exceed 40 per cent in any of the nation's 22 circles or zones.

Government will determine market share based on both subscriber number and adjusted gross revenue which is earned through telecom services. The Mergers and Acquisition (M&A) guidelines issued today however stated that a market determined fee will have to be paid if the merged entity was to hold low-priced 4.4 MHz spectrum.

The guidelines further said that the merged entity will be allowed to hold a maximum of 25 per cent spectrum allocated in a service area and 50 per cent in a particular band for telecom services under the rule.

In case of CDMA spectrum (800 Mhz band), held by firms like TTSL, Sistema Shyam and Reliance Communications, the government has fixed the upper limit of the total spectrum holding at 10 Mhz.

A merged entity will be allowed to hold a maximum of 2 blocks of 3G spectrum in a service area. This rule will check amalgamation of more than two 3G spectrum holding companies.

GSM industry body COAI's Director General Rajan S Mathews said: "We welcome clarity in M&A policy. We now expect 4-5 operators in each circle. However, step up cost on spectrum that was not acquired through auction and lock-in period are matter of concern."

Dion Global Solutions Ltd.

Story first published: Friday, February 21, 2014, 9:20 [IST]
Please Wait while comments are loading...
Company Search
Enter the first few characters of the company's name or the NSE symbol or BSE code and click 'Go'

Thousands of Goodreturn readers receive our evening newsletter.
Have you subscribed?