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Telecom sniffs merger in rule tweak

New Delhi, Oct. 13: Etisalat DB (formerly Swan Telecom) and Allianz Infratel can revive their negotiations for an alliance following moves by the telecom regulator to recast merger rules.

Such changes will also allow Datacom (owned by the Videocon Group and HFCL promoter M. Nahata) and Ruias-linked Loop Telecom, who are in talks with several foreign players for a stake sale, to form alliances.

The Telecom Regulatory Authority of India (Trai) is now planning an overhaul of merger rules, including the lock-in period clause, to facilitate consolidation in the competitive mobile phone market.

Earlier, the department of telecom (DoT) had disallowed a proposal from Etisalat DB Telecom to merge Allianz Infratech with itself. The DoT has said that there was a three-year lock-in on new operators.

The lock-in rule prevents the promoters of new telecom companies from exiting their ventures within three years of the starting of operations. The clause was earlier recommended by Trai.

The regulator wants to come out with a set of recommendations by December so that the new policy can be put in place before the end of the fiscal.

“Trai will soon float a consultation paper on M&A rules in the telecom sector, including the lock-in period clause,” said R.N. Prabhakar, member of Trai.

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