New operators including Videocon, Telenor, and Sistema Shyam Teleservices Ltd (SSTL) would be major gainers if the proposed merger and acquisition (M&A) guidelines in telecom are implemented.
Incumbent service providers such as Reliance Communi­cations, Tata Teleser­vices and Aircel would be major losers as their valuations would go down.
Under the proposed guidelines, the Department of Telecommuni­cations (DoT) would impose a condition that a company buying an existing operator will have to pay the government the differential of the price at which spectrum was allotted to incumbent and the market price of the spectrum, a DoT official said.
The new operators — SSTL, Videocon and Telenor got spectrum through auction. “Hence, the new guidelines would not have any impact on their valuations due to this conditions, in case they want to exit the market. Their valuations become attractive as the prospective buyers would not have to pay anything to the government,” said BK Syngal, former CMD of Videsh Sanchar Nigam Ltd.
However, many incumbent operators got spectrum through administered prices. Hence, any prospective buyer will have to pay the difference between the market price of spectrum and the price at which these operators got spectrum to the government. “This would reduce their valuations,” said Syngal.