TRAI: Government should rework the telecom M&A guidelines

The Telecom Regulatory Authority of India feels that the country cannot carry on with 12 telecom operators. In view of this scenario, the regulator has suggested that the present merger and acquisition (M&A) rules should be reworked by the government for any pick up in the consolidation activity.  As reported by PTI, Rahul Khullar, Chairman TRAI, said, “No jurisdiction in the world has 12 operators, mostly the countries have 5 or 4 telecom players and at some places 2. For this to happen (here) merger and acquisition guidelines have to be reworked”.

The regulator also stated that the guidelines have been a non-starter as M&A activity has not taken place despite the industry being in dire need for consolidation. Moreover, the telecom operators were also demanding changes in the M&A rules citing them as difficult. The Vodafone India Chief said, that the companies should be allowed to buy the assets of a particular firm rather than the complete firm which has a lot of debt in its accounts.

The Government has eased the M&A rules and have and has also allowed mergers between firms with up to 50 percent combined market share. Prior to this the telecom companies were allowed to merge if the combined market share of the firms does not exceed more than 40 percent in any circle of the nation.