The Indian Department of Telecom (DoT) is to relax M&A rules, smoothing the way to a market with as few as six operators per service area, according to the Economic Times. Sources cited by the newspaper said that DoT minister Kapil Sibal had been heard…
The Indian Department of Telecom (DoT) is to relax M&A rules, smoothing the way to a market with as few as six operators per service area, according to the Economic Times.
Sources cited by the newspaper said that DoT minister Kapil Sibal had been heard saying that each operator would be allocated upwards of 10MHz of spectrum, as part of proposals due to be announced at next month’s New Telecom Policy 2011 consultation.
A DoT official told the newspaper that progress on the agenda would be announced by the end of March.
Speaking at a Goldman Sachs conference, Sibal told delegates that the DoT wanted to implement a structure whereby investments would be protected in the event of M&A. He was presumably referring to new entrants such as Uninor, Datacom, Sistema Shyam, Swan and Etisalat DB, which as the market’s smallest players are the most likely candidates for M&A.
The companies most likely to remain in the sector include homegrown giants Bharti Airtel, Reliance Communications, BSNL and Idea Cellular, as well as companies with international owners such as Vodafone Essar and Tata Teleservices. They will be interested in the new entrants’ spectrum rather than their infrastructure, which would just replicate their own.
Until now, M&A among Indian operators has been made difficult by restrictions designed to stop the foreign owners of new entrants from simply flipping their assets. An analyst quoted by the paper said that such a move would force the larger operators to reimburse targets’ capital expenses, which would make acquisitions too expensive, which is the case at present also.
Earlier this month, Sibal was reported to have asked mobile operators to sort out their differences about spectrum allocation by the end of the month.
Against the backdrop of the 2G scam, Sibal met with industry leaders to discuss regulatory changes and draft a new telecom policy. He was quoted saying that companies should work together to ensure the industry is robust.
The government has drafted a strategic plan for the telecoms sector that includes spectrum sharing, M&A and the introduction of MVNOs. The draft plan also involves the establishment of a committee to review the use of spectrum. Sibal set himself a 100-day deadline to announce the policy when he took office at the end of last year.
This comes as the Telecom Regulatory Authority of India (Trai) issued propositions about excess spectrum charges and spectrum prices. The next step will be for the Telecom Commission, a division of the Department of Telecommunications, to consider the proposals. Sibal told TV audiences a few weeks ago that the changes seemed reasonable.
However, Bharti Airtel was quoted saying the proposed pricing defies logic, while Vodafone Essar said the proposals “are flawed, illogical, discriminatory” and that it “strongly disagrees” with a one-time bandwidth fee.
