New Delhi, June 3: Sections within the department of telecommunications (DoT) feel mergers and acquisitions in the sector can pose a threat to competition.

DoT officials said, “In an industry, which already has a limited number of players, further consolidation is uncalled for as it could lead to a monopolistic market structure. This could limit competition and hinder the quality of service offered to consumers.”

In monopolistic conditions, only a few firms make up an industry. They have control over the price and the quality of services offered.

DoT officials said the government was planning to let operators offer services using a combination of GSM and CDMA technologies to boost competition.

“This will, for instance, enable Reliance Communications, the No. 1 in CDMA services, to also enter the GSM segment leading to increased competition among the existing players,” the official said.

Only state-owned telecom companies — BSNL and MTNL — offer services on both the CDMA and GSM platforms.

DoT has also sought the views of the Telecom Regulatory Authority of India on restricting the number of mobile operators in a circle, to enable them to improve the quality of services. “This could boost competition among the existing players,” said the DoT official.

According to the existing laws, there is no restriction on the number of operators. On an average, there are about five to eight service providers in a circle, creating a huge demand on spectrum.

Earlier, the government had restricted the number of operators in a circle to four.

This restriction was removed after the CDMA operators entered the fray. But with the government finding it difficult to allocate adequate spectrum to the existing operators, DoT is exploring the option of capping the number of service providers.

“This could have an impact on the Spice-Idea merger being discussed,” said analysts. They said the expansion plans of Spice Telecom was held up primarily because of the non-availability of spectrum in many key circles.

Spice operates in just two circles — Punjab and Karnataka. Telekom Malaysia, which holds 49 per cent in Spice Telecom (the BK Modi group holds 51 per cent) is keen to expand its footprint in India and make some acquisitions in the country.

Spice Communications is planning a merger with Idea Cellular to create the country’s fifth largest telecom player.