The UPA government will allow mergers and acquisitions in the telecoms sector that create combined market share of up to 35%, under a quick and simple process, Telecoms Minister Kapil Sibal said.
A new telecoms policy will be announced in April, he added.
The sector regulator has proposed a relaxation of rules for M&A in the telecoms sector in a move to facilitate a long-awaited consolidation in the 15-player market.
The government is overhauling its decade-old telecoms rules after the once-booming sector was hit by a massive scandal over alleged below-price sale of lucrative telecoms licences and radio spectrum.
The Supreme Court earlier this month ordered all 122 zonal telecoms licences given to companies in a scandal-tainted 2008 sale be revoked in four months and asked the regulator to propose rules for grant of radio airwaves through an auction.