Mergers and acquisitions (M&As) of telecom licencees would not be allowed if the number of service providers would fall below four after the M&A, the department of telecommunications (DoT) announced on Tuesday. Both parties would also need prior approval of DoT for any M&A to take place.DoT, in its ‘guidelines for intra-service-area merger of cellular mobile telephone service (CMTS)/ unified access services (UAS) licences’, said the combined market share of the merged entity shall not be greater than 40 per cent in terms of subscriber base or revenue. The merged entity shall be entitled to the entire spectrum held by the merging entities, if they meet the spectrum conditions within three months of DoT approval.Although the industry remained tight-lipped on the guidelines, sources said, “The new rules are going to seriously hamper consolidation in the industry, especially due to the 40 per cent criteria.”The revised guidelines for intra-service-area merger of cellular and UAS licences are in line with the Telecom Regulatory Authority of India (Trai) recommendations of October last year.For regulating equity acquisitions by one access services licencee of another access services licensee in the same licence area, the present guidelines on substantial equity (10 per cent) will continue. Trai had proposed 20 per cent.DoT has set a three-year lock-in period for giving any permission for merger. “Permission shall be accorded only after the completion of three years from the effective date of the licences”, it said.Consequent upon the merger of licences in a service area, the post-merger licencee shall be entitled to the total amount of spectrum held by the merging entities, subject to the condition that after merger, the licencee shall meet, within three months from date of approval of merger by the licensor, the prevailing spectrum allocation criterion separately for GSM & CDMA technologies, as in case of any other UAS/CMTS licencee(s). In case of failure to meet the spectrum allocation criterion, post-merger licensee shall surrender the excess spectrum.
