Following the 2G auctions, which concluded last week, Department of Telecommunications (DoT) has finally released the much-awaited merger and acquisition guidelines for the telecom sector. These guidelines are expected to pave the way for consolidation in the sector with major telcos acquiring struggling telcos for more spectrum in the country while providing an exit route to these telcos. The process seems to have begun with India’s largest mobile operator Bharti Airtel inking a strategic agreement to acquire the operations of Mumbai-based Loop Mobile earlier this week. DoT also mentions that it has decided, in-principle, to allow trading of spectrum. Remember that TRAI had released its final spectrum trading recommendations last month, wherein it had recommended outright spectrum transfer and a two years lock-in period. Livemint says these guidelines will now be placed before the cabinet for approval by February 27. You can download the guidelines here. Telco M&A Rules - 50% Marketshare Limit: The marketshare limit for transfer and merger of licenses has now been increased to 50% from 35% i.e. merger will be allowed where the marketshare of the combined entity in the respective service area is up to 50%. In case, the marketshare of the combined entity exceeds 50%, the entity should reduce it to 50% within one year of the merger, failing which suitable action shall be initiated by the licensor.. The market share of both subscriber base and Adjusted Gross Revenue of licensee in the relevant market shall be considered for determining market power, taking access into consideration, not wireline and wireless separately. After merger, spectrum held by the entity…
