Telecom M&A guidelines need to be reworked for consolidation, says Trai Chairman

The Telecom Regulatory Authority of India (Trai), with a view that the country cannot carry on with 12 telecom operators, said on Monday that current merger and acquisition (M&A) rules needed to be reworked by the government for any pick up in consolidation activity.

"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 (in the country) merger and acquisition guidelines have to be reworked," Trai chairman Rahul Khullar said in the national capital.

Easing the M&A rules, the government had allowed mergers between firms with up to 50 per cent combined market share.

Khullar said the guidelines have been a non-starter as M&A activity has not taken place despite the industry being in dire need for consolidation.

"I think the industry is in dire need of consolidation, its simply just cannot carry on like this with 10-12 operators, some of them bleeding to death and it has to stop," the Trai Chairman said.

Telecom operators have long been demanding changes in the M&A rules, terming them difficult.

Vodafone India CEO Marten Pieters had earlier said that companies should be allowed to buy assets of a particular firm such as spectrum and not the entire firm which has a lot of debt in its books.

Giving an example, Pieters had said, "We love to buy 3G spectrum but for 3G spectrum, if I have to buy complete operator who has 3G spectrum... It comes with all kinds of stuff I don't want because I have it all. So, it is very difficult to make an attractive proposition in such a situation."

Earlier, telecom firms were allowed to merge if their combined market shares in terms of subscriber base does not exceed 40 per cent in any of the nation's 22 circles or zones.