Regulator suggests easing rules for telecom M&A
According to Trai current merger and acquisition (M&A) rules in the telecom sector need to be reworked by the government to bring consolidation in the sector
New Delhi: Telecom regulator Trai believes that the current merger and acquisition (M&A) rules in the telecom sector need to be reworked by the government to bring consolidation in the sector which has too many players. “No jurisdiction in the world has 12 operators, mostly the countries have 5 or 4 telecom players and at some places 2. For this to happen (here) merger and acquisition guidelines have to be reworked,” said Trai chairman Rahul Khullar.
Mr Khullar was of the view that the current guidelines have been a non-starter as M&A activity has not taken place despite the industry being in dire need for consolidation.“I think the industry is in dire need of consolidation, its simply just cannot carry on like this with 10-12 operators, some of them bleeding to death and it has to stop,” said the Trai chief.
In the recent years, the balance sheet of the telecom players has been bleeding due to fierce competition. However, some telecom operators margin are showing improvement and they have been able to hike tariffs. The government has allowed mergers between firms with up to 50 per cent combined market share. There have been reports of some telecom players being interested to sell off due to huge financial burden.
However, these mergers have not happened due to various issues effecting the sector including spectrum and uncertainty on regulatory side faced by the sector.
( Source : dc correspondent )
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