Telecom Operators who are looking forward to a holistic review of the rules on mergers and acquisition are in for disappointment as the Department of Telecommunication has pointed out that they will not relook the rules as a whole but deal with it individually when someone approaches them.
DoT has also made it clear that they will not auction spectrum in new bands unless carrier’s request for them. The move is to avoid a situation of supply with no demand for sale.
The officials at DoT has made it clear that no one has approached them with any official complaints.The current Merger and Acquisition rules has not gone down well with the telecom industry. The guidelines include a contentious clause that requires a buyer to pay market-linked prices for spectrum that comes with any acquisition. The industry opines that the rules are in need of consolidation as the competition has left operators in debt.
Operators state that the clause is the major reason behind deals not finalised even 18 months after notification, as it raised the cost of acquisition as well. Other clause that allowed merged entity to hold a maximum of 25% spectrum allocated in a service area and 50% in a particular band is another hurdle for the operators.This particular clause has stopped Airtel, Vodafone India and Idea Cellular from striking a deal among themselves. The big three were however allowed to strike deal with smaller operators in limited circles. Smaller operators were allowed to combine among themselves through the clause.
A combination of Reliance Communications and Sistema Shyam Teleservices which is on the charts have raised confusion about the bandwidth cap applicable for holders of 800 Mhz airwaves in a Merger and Acquisition – 10 Mhz or 50%.
The spectrum caps are the kind of issues that needs to be sorted out through a holistic relook at M&A rules, says Rajan Mathew,Director General COAI. ” There is no clarity.Case by Case revisions will not work,”he said.