The Department of Telecommunications (DoT) has poured cold water on hopes of consolidation in India’s crowded wireless market, with an official revealing the regulator will not be revising merger and acquisition (M&A) rules. The Economic Times cited a DoT official, who did not want to be named, as saying that the regulator would instead deal with M&A matters on a case-by-case basis. Despite high levels of demand for consolidation, India’s operators have held off on completing any deals until the government reviews the M&A rules. A major sticking point for the nation’s cellcos is the requirement for the purchasing company to pay the government a market-linked price for spectrum gained via acquisitions, substantially increasing the cost of any transaction. The cost of airwaves is already a controversial issue in India, with recent tariff increases being attributed to the prices paid by the nation’s cellcos in the most recent spectrum auction, which took in INR1.099 trillion (USD17.5 billion) for the government. Another contentious clause is the cap on spectrum holdings, which limits providers to 25% of the allocated spectrum in each circle or 50% in a particular band.
Commenting on the announcement, Rajan Mathews, director general of industry group the Cellular Operators Association of India (COAI), complained: ‘There is no clarity. These [spectrum caps] are the kind of issues that need to be sorted out through a holistic relook at the M&A rules. Piecemeal revisions won’t work…You can’t have an isolated policy, and then a piecemeal approach to resolving issues.’ Mr Matthews added that the M&A rules needed to be aligned with those of the Competition Commission of India (CCI) and the Securities and Exchange Board of India (SEBI).