Telecom Regulatory authority of India (TRAI) has come
out with M&A guidelines. It has increased operator
cross-holdings to 20 per cent from 10 per cent and has
made recommendations on spectrum charges.
to TRAI''s recommendations, the ceiling on the number of
licenses or operators in a circle is unlikely though the
pan India service providers and GSM operators may be in
for negative news. Reliance Communications, on the other
hand is a likely beneficiary as TRAI has allowed operators
to operate in multiple service technologies.
has also made it clear that the dominance of market players
should not be more than 40 per cent if a merger takes
place, which gives a clear indication that the telecom
regulator does not want leading service providers to merge.
also means that smaller operators like Spice, Idea and
Aircel will become the M&A targets for the bigger
has also said that no M&As will take place in circles,
which have less than four operators.
M&A dominance criteria will now be based on subscribers
and AGR. The 15 Mhz ceiling has also been removed in case
telecom companies provide coverage to 80 per cent of rural
area their universal service obligation charges will come
down to 3 per cent instead of 5 per cent.
termination of license clause for roll-out obligation
is unnecessary now.
though TRAI''s recommendation on raising the cross-holding
limit comes as positive news for an industry looking at
a consolidation, the regulator has also raised the price
of spectrum for GSM operators in the country.
spectrum charge for beyond 8 MHz has been raised by 1
per cent and operators going beyond 10 MHz need to pay
a one-time charge of Rs16 crore.
a result, the cost to the industry is likely to go up
because in most of the metros this spectrum is already
above that level.
thee Cellular Operators Association of India has welcomed
the removal of the ceiling on spectrum, it has deplored
the "double-whammy" that the one-time charge
of Rs16 crore in addition to raising of the price of spectrum
by 1 per cent for GSM operators.
V Ramachandra, director general, Cellular Operators Association
of India has a view that it''s a sort of a double whammy
in terms of the charging Rs 16 crore as well as raising
the percentage usage charges for getting spectrum beyond
10-megahertz and this is going to add to the service cost.
told CNBC-TV18 that the recommendations were very comprehensive
and require detailed study.
said, "But from initial responses, which I can give,
they appear to be tightening up significantly for getting
more spectrum beyond 10-megahertz. I think it''s a sort
of a double whammy in terms of the charging Rs16 crore
as well as raising the percentage usage charges. This
is going to make it very tight, adding to the cost of
aspect, which we notice, is that for any cross over technology
allotment, the company will have to pay license fee and
go through the process, which I think is a fair way of
looking at it. Also they have not kept the cap on number
of players, which is fine by us because it is always better
to let market forces deal with that.
cap of 15 mega hertz on spectrum, which was rather untenable
in the current scenario, has been removed. They have said
that there should be no cap on mergers and acquisition
and I think that''s a step in the right direction. For
other things we will have to read it with details before
we can respond."