Monday, 30th October 2017

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Trai in bid to push telecom mergers

Subscriber base and AGR to be considered in determining marketshare for mobile and internet service providers

By TT Bureau in New Delhi
  • Published 22.02.20, 12:31 AM
  • Updated 22.02.20, 12:31 AM
  • 2 mins read
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The sector has virtually only four operational players — Reliance Jio, Vodafone Idea, Bharti Airtel and BSNL (Shutterstock)

The telecom regulator on Friday released fresh proposals for mergers and acquisitions in a sector wracked by the controversy over adjusted gross revenues (AGRs) and where there are only four operational players — Reliance Jio, Vodafone Idea, Bharti Airtel and BSNL.

The Telecom Regulatory and Authority of India (Trai) has suggested that both subscriber base and AGR would be considered in determining marketshare for access and internet service providers, while only revenue should be taken into account in market share calculation for other services such as national and international long distance telephony.

Trai in its recommendations said if an entity holds more than 50 per cent market share it is already a significant market player and would be discouraged from undergoing mergers. “In a way, restriction on market share of 50 per cent works as a red-line,” the regulator said.

However, the regulator says, in case two licensees want to merge and in some of the service areas, they are exceeding the permitted market share of 50 per cent, they have a one year period to shed the excess market share and if required, they can engage with a virtual network operator (VNO) to shed its excess share.

In such cases, Trai has said that for computing the marketshare of “an NSO (Network Service Operators) in the relevant market, market share of the VNO parented with it should be added to the market share of NSO, if the NSO is a promoter of VNO”. The virtual network operators can provide telecom services like mobile landline, internet, but only as a retailer for the full-fledged telecom operators.

The sector regulator also suggested that the one-year timeline currently allowed for the transfer/merger of licences in different service areas after the National Company Law Tribunal nod should exclude the time spent by companies in pursuing any litigation on account of which the final approval of a merger is delayed.

Trai recommended that the guidelines on transfer/merger of licences should not “hard-code” (that is, explicitly specify) the spectrum caps. Instead, it should be linked with the relevant clause of the licence, it said.

Trai has now released its recommendations on reforming the guidelines for the transfer and merger of telecom licences, after the telecom department in May 2019 sought its views on enabling simplification and fast-tracking of approvals.

“For calculation of one year that is time period allowed for transfer/merger of various licenses in different service areas subsequent to the approval of the Tribunal/Company Judge, the time spent in pursuing any litigation on account of which the final approval of a merger is delayed, should be excluded,” Trai said.

This would protect the rights of a telecom operators to pursue remedies in court and also ensure that the period of one year does not become redundant for no fault of companies on account of pendency of an issue before a court, one of the stakeholders cited by Trai had submitted.

Another provision of the acquisition guidelines which provides an exemption from substantial equity/cross holding clause for a period of one year or more should be modified such that the said exemption is provided only for a period till transfer/merger of licence is taken on record by the licensor (telecom department), Trai recommended.

It also suggested that both the number of subscribers as well as AGR should be considered for determining the marketshare in case of services such as access, internet and VSAT. And that only AGR should be considered for determining the marketshare for the rest of the services such as national and international long distance, and the resale of international private leased circuits.

Indus Tower-Infratel

The DoT on Friday approved the merger of the country's largest mobile tower company Indus Towers with Bharti Infratel, sources said. The duo will create a company with over 163,000 towers.