India eases merger norms in telecom sector
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India on Wednesday announced new norms for the telecom industry, making mergers and acquisitions (M&As) easier in the sector that is set to enter a phase of consolidation after the recent Supreme Court order revoked 122 2G licences.
"Merger up to 35 per cent market share of the resultant entity will be allowed through a simple, quick procedure," Communications Minister Kapil Sibal said, reading out the changes in policies governing licences, spectrum and merger norms.
Sibal said that all players would henceforth need to stick to the prescribed limit on spectrum and that mergers beyond 35 per cent would be allowed only in cases where it did not violate this limit.
The Supreme Court has ordered revocation of 122 licences issued in 2008 affecting a few foreign players such as Olso-based Telenor, the parent firm of Uninor, Russian Sistema which has a joint venture with Shyam Group and runs its India operations under the MTS brand, and Abu Dhabi-based Etisalat, which has 45 per cent stake in Indian telecom firm Etisalat DB.
Many of the affected players have hinted at exiting from their India businesses that would lead to a consolidation in the industry.
The minister said that all future licences will be unified licences and allocation of spectrum will be de-linked from the licence.
"Spectrum, if required, will have to be obtained separately," Sibal said and added that 2G spectrum sharing will be permitted but in the same licence service area and the licences will be renewed after 10 years.
Also, licence fee will not be uniform across all telecom licences and service areas, and will be made equal to eight percent of the adjusted gross revenue (AGR) in two yearly steps starting from 2012-13.
Service providers will also be allowed to share 2G spectrum. But the minister ruled out any possibility of allowing the same for 3G spectrum sharing.
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