New telecom operators can’t sell stake for three years


New Delhi : Mergers and acquisitions between new telecom operators will be allowed only if they have completed three years of operations after being issued licenses, Communications and IT Minister A. Raja said here Tuesday.

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Additionally, the market share of the merged entity in the relevant telecom region should not be more than 40 percent either in terms of subscribers separately for wireless and wired line phones, or in terms of adjusted gross revenue (AGR), he said.

“We have referred the three-year lock-in period to TRAI (Telecom Regulatory Authority of India) and the ministry of company affairs,” Raja said during the annual Economic Editors’ Conference.

The post-merger licensee entity will be entitled to the total spectrum held by the companies before the merger, and will have to fulfill all the conditions applicable for holding such spectrum within three months of the merger, he added.

Siddharth Behura, secretary in the Department of Telecommunication, said the government was also considering easing norms for rollout of services.

Under the existing rules, telecom operators are required to roll out 10 percent of services within a year and are liable to pay a penalty if this obligation is not met.

However, if the new norms are introduced, operators will have three years to roll out 50 percent of services.

Raja reaffirmed that the third generation (3G) mobile services spectrum and the broadband wireless access (BWA) auction will be completed in January next year.

“Spectrum will be allotted through simultaneous ascending e-auction,” he said.

The communications minister also said mobile number portability (MNP) service will be launched from next June in the four metros initially and other parts of the country by 2009-end.

This policy will enable mobile telephone users to retain their mobile telephone numbers when changing from one mobile network operator to another.

Raja said foreign investment in the telecom sector increased to $1.26 billion in 2007-08 from $478 million in 2006-07.

More than 10 million subscribers were added last month, while the total number of connections has gone up from 142 million in March 2006 to 353 million in September 2008, he said.