Mergers and acquisitions (M&As) in the telecom sector is set to become costly.
The department of telecommunications' guidelines propose that if the merged firm commands below 35% market share, then approval will be automatic beyond which government's permission would be required.
A company buying an existing operator would have to pay the government the differential of the administered price at which spectrum was allotted to incumbent and the market price of the spectrum.
For example, if market price of 5 MHz of pan-India spectrum is Rs. 14,000 crore and the incumbent has been allotted it at Rs. 1,650 crore, then the new operator will have to pay Rs. 12,350 to the government.
"If implemented, this will completely change valuation of a company," said BK Syngal, former CMD of VSNL.