Ease M&A Guidelines for Telcos Recommends TRAI

Anuj Sahay

The Telecom Regulatory Authority of India (“TRAI“) on Thursday, 3 November 2011, made recommendations to the Department of Telecom (“DoT“) in relation to “Spectrum Management and Licensing Framework”. TRAI made recommendations on a number of issues, including mergers and acquisitions in the telecom sector. The existing guidelines issued by the DoT in 2008 allow such mergers only if the combined markets share of the resultant entity does not exceed 40%. Keeping in mind, the international practices on the subject, as well as the Competition Act, 2002, TRAI recommended as follows:

(a)     companies should be allowed to merge, if the combined subscriber share or the average gross revenue of the resultant entity does not exceed 35%,

(b)     prior approval from TRAI must be obtained where the combined subscriber share or the average gross revenue of the resultant entity would go above 35% but would not exceed 60%,

(c)     mergers where the combined subscriber share or the average gross revenue of the resultant entity would go beyond 60% must not be permitted, and

(d)     spectrum holding by the resultant entity must limited to 25% of the spectrum assigned in a service area.