NEW DELHI: The telecom department (DoT) won’t relook rules on mergers and acquisitions as a whole but deal with it on a case by case basis, dampening hopes of telecom operators who want a holistic review of the guidelines which they have labeled unfriendly.

Speaking to ET, a government official further added that the telecom department won’t auction spectrum in new bands such as in the 700 Mhz band unless carriers make requests for them, to avoid a situation of supply but no demand during a sale.

“We are not revising the (M&A) rules. Let someone approach us and we will deal with it individually,” a senior official told ET.

The official added that no one had approached the department with any official complaints so far. The current M&A rules have caused much heartburn in the telecom industry, which is in dire need of consolidation as competition has hurt the financials of operators, leaving then with huge debt. The guidelines include a contentious clause that requires a buyer to pay market-linked prices for spectrum that comes with any acquisition.

This clause, most operators said, is the biggest factor behind deals not being inked even nearly 18 months after notification, as it raised the cost of acquisition. Other hurdles included a clause that allowed a merged entity to hold a maximum of 25% spectrum allocated in a service area and 50% in a particular band. This practically ruled out the big three – Airtel, Vodafone India and Idea Cellular – from striking a deal among themselves but allowed them to do so with smaller operators but only in limited circles. The clause however was seen to be allowing the smaller operators to combine among themselves.

A proposed combination of Reliance Communications and Sistema Shyam Teleservices – talks for which were announced on Monday – has raised confusion about the bandwidth cap applicable for holders of 800 Mhz airwaves in an M&A – 10 Mhz or 50%.

“There is no clarity. These (spectrum caps) are the kind of issues that need to be sorted out through a holistic relook at the M&A rules. Piece-meal revisions won’t work,” said Rajan Mathews, director general of COAI.

Source: ETTelecom