In a move that could lead to consolidation in the Indian telecom sector, the Telecom Commission has approved telecom regulator Trai's proposal on rules for mergers and acquisitions in the sector. Telecom Secretary R. Chandrashekhar opined that the Telecom Commission is also not opposed to the Trai’s recommendation to charge a one-time fee on operators for holding spectrum beyond 6.2 mega hertz.
Chandrashekhar further elucidated that the commission has accepted the regulator’s proposal that mergers and acquisitions will get automatic clearance if the combined market share of the new entity is less than 35% and spectrum holding is less than 25%. Whereas, if the market share of the combined entity is more than 35% but less than 60%, the regulator will examine the case to avoid monopoly in the market.
The move may spur consolidation in the 14-player telecom industry, out of which a number of new players are yet to make a mark even as increasing number of people in the country start using mobile phones every month. The commission also favored a proposal to levy within the next two years a uniform license fee of 8% on companies that offer various telecom services, against 6%-10% previously impose depending on factors such as service and region, said the Telecom Secretary.
Telecom tower companies and internet service providers will also have to share 8% of their annual revenues from now on. Until now, the telecom tower companies and internet service providers were not obliged to pay any annual licence fee. After finalizing all other decisions within a week’s time, the commission is likely to forward the decisions to Telecom Minister Kapil Sibal and subsequently seek Cabinet's nod to implement them.
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