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Telecom regulator asked to review merger rules

DOT has urged the telecom regulator to view issues of acquisitions and decide whether new players can be accommodated, reports Rajendran.

business Updated: Apr 21, 2007 17:56 IST

The Department of Telecommunications (DoT) has asked the telecom regulator to review the critical issues of merger and acquisition rules brought under the limelight by the recent acquisition by Vodafone of a majority stake in Hutch Essar - and whether to allow more players in various telecom circles.

DS Mathur, Secretary DoT, has written to the chairman of the Telecom Regulatory Authority of India (TRAI) seeking a review of the clause that allows an unlimited number of players in any given circle.

Currently on an average there are five to eight operators in a circle, and more than 159 applications have been processed by DoT for issue of universal access service licences (UASL).

A DoT official explained: "TRAI had said in 2004 that it would review the merger and acquisition rules the year after It is now 2007, and we have written with a query whether TRAI has made the review and if not, would it undertake the review. Under section 11.2 of the Trai Act, DoT can request TRAI to make such a review."

TRAI chairman Nirpendra Misra, when contacted, stonewalled queries saying, "I cannot comment on official communications.

" According to the Act, TRAI can make recommendations, either suo motu or on a request from the licensor, on several issues, such as:

. The need and timing for introduction of a new service provider

. Measures to facilitate competition and promote efficiency in the operation of telecommunication services,

.Measures for the development of telecommunication technology, and

.Any other matter relatable to the telecommunication industry in general or to the efficient management of available spectrum.

Telecom analysts feel the two issues raised by DoT do require attention from the regulator "Availability of spectrum is a major issue already, and more the players in a circle, more the spectrum requirement.

"DoT has not been able to make the spectrum available to even existing players, and more existing operators are seeking all India licences. We have a situation on hand," said Prashant Singhal, telecom practice leader at Ernst & Young India.

About the merger and acquisition issue, he added: "Another round of consolidation in telecom is imminent in next three years. DoT must have a clear set of rules in place for M&A."