DoT re-looking at ways for telcos to sell biz seamlessly

The Department of Telecom is taking a fresh look at formulating an exit policy that will enable loss-making companies transfer their businesses to an existing player without procedural hassles.

“The DoT is firming up a policy for spectrum trading and sharing but even this cannot be an answer to having an exit policy. We are now looking at allowing a player to transfer its business to a stronger player, including all approvals and permissions granted within the licences,” said a DoT official.

In 2012, the department had wanted to formulate an exit policy but telecom regulator TRAI had shot down the move.

Besides the exit policy, the DoT has listed 15 other issues that need immediate direction, including the dispute relating to 3G roaming deals, the definition of rural districts for fulfilment of the 3G and 4G rollout obligation, and revenue separation by broadband players.

A committee headed by the DoT Secretary has been formed to find solutions for these outstanding issues, which could throttle the telecom sector if left unresolved for too long.

As of now the only way for an operator to exit the market is by either surrendering licences or by going through the merger and acquisition route.

While the former does not allow the exiting player to recover investments sunk in the business, the rules around M&A make it very tough for anyone to sell out. Operators such as Tata Teleservices and Aircel have been looking to find a suitable buyer for over a year now without much success, primarily because of the existing rules.

Although they continue to operate in the market with fresh funds pumped in by promoter companies, they find themselves locked in.

This situation is not only bad for such telecom companies but also for the overall industry, as spectrum resources currently with these players could have been better utilised had they been able to exit.

Under the existing policy, when an operator acquires the operations of another player, it has to seek fresh permission and authorisations. This can disrupt services, as the clearances take time to come through.

The most recent example is Loop’s agreement to transfer its mobile users in Mumbai to Airtel, which is still awaiting DoT clearance with less than a month to go for the licence to expire.