Telecom firms have been forced into going for M&A deals after the entry of Reliance Jio last September. Photo: Pradeep Gaur/Mint
New Delhi: The Telecom Regulatory Authority of India (Trai) has sent recommendations to the department of telecommunications (DoT), urging the government to make the process of mergers and acquisitions (M&A) for telecom companies easier.
In its recommendations on “ease of doing telecom business”, made public on Thursday, the regulator asked the government to spell out a definitive timeline, not exceeding 30 days post-National Company Law Tribunal (NCLT) approval, for providing written approval for transfer or merger of licences.
Telecom firms have been forced to go for M&A deals after the entry of Reliance Jio Infocomm Ltd last September, which after offering services free for almost seven months announced rock-bottom tariffs.
While the second and third-largest players Vodafone India Ltd and Idea Cellular Ltd have decided to merge, market leader Bharti Airtel Ltd also announced three separate acquisitions of Tikona Digital Networks, Telenor India and the consumer mobility businesses of the Tata group.
If these recommendations are accepted by the government, they will ease consolidation in the sector.
Trai has also suggested that if a merger results in spectrum holding beyond the permissible cap, the resultant entity should be given an option to either surrender or trade its spectrum holding within the stipulated period of one year.
Moreover, it has recommended that spectrum trading should be permitted in all the spectrum bands which have been put to auction.
The permissible block size for trading in a band should be the same as specified in the notice inviting applications for the latest auction held.
In case of breach of licence conditions by an operator, the Telecom Regulatory Authority of India has suggested that the government come up with a suitable matrix linking the penalty to the severity of the incident and recurrence of the violation.
Under the present licence conditions, the maximum penalty imposed per violation for each occasion in a service area starts from Rs10 lakh and can go up to Rs50 crore.
The new rules should significantly ease M&As and improve normal operations of the telecom service providers, Rajan Mathews, director general of telecom lobby group Cellular Operators Association of India (COAI) said.
Welcoming the regulator’s suggestion to come up with a suitable matrix to calculate penalties, Mathews said at a time when the industry is financially distressed, and needs all the help it can get from the government, these recommendations come as a breath of fresh air.