Mobile operators, including Sistema, Telenor, Aircel and Tata Teleservices, could be disappointed with the Telecom Ministry in no mood to relax the mergers and acquisition norms.
The Telecom Ministry has retained the condition that if an operator buys another player in the same circle then the buyer will have to pay to the Government a sum equivalent to the auction determined price for the spectrum owned by the seller.
The condition
This means that if Sistema wants to buy an operator like Tata Teleservices then it will have to pay to the Government for the entire spectrum held by the Tatas at market determined price.
According to DoT sources, this rule is being proposed to ensure that the Government does not lose out. The concern is that operators could bypass the auction and acquire spectrum from other players.
The merged entity will be allowed to retain only one block of 4.4 MHz of GSM spectrum or 2.5 MHz of CDMA spectrum. Merger up to 35 per cent market share of the resultant entity will be allowed as long as the combined entity does not hold more than 25 per cent spectrum available in a circle.
The DoT may also not change the lock-in period for promoters of the merged entity. Any entity which holds more than 10 per cent or more in the company will not be allowed to dilute stake for three years. Fresh equity can be given but declaration of dividend will be barred.
Huge debt
DoT officials said the final rules will be announced next week after the approval of the Telecom Ministry. The rules would be a blow to the plans of the some of telecom companies that were hoping to exit the market.
A number of players are laden with huge debt due to a weakening market. Aircel, for example has a debt of over Rs 24,000 crore. Malaysia-based Maxis own 74 per cent stake in the company and has wanted to exit, according to industry sources. It will be difficult for the promoters to find a buyer if huge amounts of money has to be paid to the Government.
Under the M&A rules, the buyer will have to pay as much as Rs 14,500 crore to the Government to acquire Aircel, which would make any deal sour. This is good news for incumbent big players who could then squeeze out the troubled players.
thomas.thomas@thehindu.co.in