The existing stringent merger and acquisition rules will be eased in the new telecom policy that will be in place by the year-end, communication minister Kapil Sibal said on Monday. The move is aimed at bringing in much-needed consolidation in the hyper-competitive 14-player telecom market. Sibal did not divulge details regarding the relaxation of M&A rules.
"But, the number of competitors should not be allowed to fall below six in each circle," he said. Sibal said telecom licences should be renewed for 10 years compared with 20 years currently, and said companies must submit applications for new permits at least 30 months prior to the expiry of their licences.
At present, telcos hold separate permits for each of the 22 circles in the country and these are valid for a period of 20 years. The government gave away mobile permits from mid-90s. About 11 mobile phone companies will have to renew their permits between 2014 and 2021. Reiterating his earlier announcement, Sibal said the new policy would also de-link the allocation of telecom licences from mobile spectrum. Currently, mobile permits come bundled with start-up airwaves.
The minister also proposed a series of reforms to address all issues related to airwaves, including the formulation of a National Spectrum Act to govern all allocations of this scarce resource. Retired Supreme Court Judge Shivraj Patil will head the committee to draft this Act, he added.
Spectrum is at the centre of almost all the controversies in India's telecoms industry.
"By separating spectrum from licence, spectrum is no longer the bottleneck for someone to enter in the industry and offer services. In terms of pricing, ideally spectrum should be auctioned. The National Spectrum Act would have to refine the entire spectrum allocation, valuation and pricing process. But they must keep in mind that there are existing players that have invested huge monies. It will be a balancing act." Analysys Mason India director Kunal Bajaj said.
External agencies, such as private auditors, the comptroller auditor general of India, better known as CAG, or even the telecom regulator TRAI, to do regular audits of spectrum usage by the industry, Sibal said, and added that other proposals such as sharing of radio frequencies amongst operators were also likely to be part of the new policy.
The minister also emphasized that the government will ask telcos to pay for spectrum based on a market-driven mechanism, an indication that the telecoms department (DoT) will implement regulator's Trai's latest recommendations and ask GSM telcos to pay for all 'excess' airwaves they hold on a retrospective basis.
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