The Telecom Regulatory Authority of India (TRAI) on Thursday proposed a relaxation of guidelines for mergers and acquisitions in the telecom sector that if implemented by the government would facilitate a long-awaited consolidation in the crowded 15-player market.
India's once-booming telecom sector has struggled in recent years due to ferocious competition and a graft scan
dal, prompting authorities to overhaul decades-old industry regulations.
Analysts have called current rules restrictive for mergers and acquisitions. India's telecoms ministry has said it will relax rules to facilitate a sector consolidation as part of a new telecoms policy.
On Thursday, the sector regulator proposed that companies should be allowed to merge if their combined subscriber or revenue market share does not exceed 60 percent, although its consent would be required for any merger that would create a company with a market share of between 35 and 60 percent.
Under current rules, two companies can merge only if their combined market share does not exceed 40 percent.
We expect that there would be lot more of mergers taking place in the course of next year or two, J.S. Sarma, chairman of the TRAI, said at an industry event.
The regulator's proposals must be accepted by India's government before they can be implemented. The regulator also proposed implementing within the next four years a uniform licence fee of 6 percent of the firms' annual revenue, from a variable fee of 6 to 10 percent currently. It also proposed allowing companies to share spectrum for five years, and allow renewal of a subsequent five-year period.
Earlier this year, the TRAI proposed steep increases in spectrum prices and a one-time fee on spectrum beyond 6.2 megahertz, drawing howls of protest from carriers. Sarma said on Thursday there was no change in the pricing proposals, which will be finalised by the government.