Trai moots easier norms for telecom business, speedier M&A nods by DoT

Published On: 01, Dec 2017 | Source:

The Telecom Regulatory Authority of India (Trai) on Thursday recommended to the department of telecommunications (DoT) that it should clear a merger proposal within 30 days of it being cleared by the National Company Law Tribunal (NCLT). It also said if DoT has any objections to any merger or acquisition proposal it should file its objections within the stipulated window of 30 days after it is notified about it by the tribunal. Trai’s recommendations are part of ease of doing business in the telecom sector and once the government accepts them the pace of M&A transactions getting completed would quicken. “In the past, it has been noticed that the written approval for merger of service licences from the licensor (DoT) sometimes takes a very long time. Such considerable delays could also hamper the benefits of synergies through merger,” Trai explained.

Besides, the regulator suggested that in case the spectrum holding of a merged entity is in excess of the permissible limits, it should be allowed to surrender or trade the excess airwaves within a year. The recommendation makes business sense as when the DoT had announced the M&A guidelines in February 2014, spectrum trading was not permitted. It came later in October 2015. Trai feels that since a mechanism is now in place, merged entities should be given the same rights. That apart, it has recommended that if a transferor company holds a part of spectrum, which has been assigned against entry fee paid, then the merged entity will have to pay the differential amount against the entry fee paid by the transferor company only from the date of written approval of merger by DoT.

At present, the differential is calculated from the date of approval of merger by the NCLT. Here, the regulator said a merger is not effective unless it is approved by licensor or the DoT and hence the merged entity will be able to derive benefits of the merger only after it gets the said approval. In light of this, Trai recommended that the merged entity should be liable to pay the differential amount for the spectrum assigned against the entry fee paid by the transferor company only from the date of approval by DoT. Such a step will reduce the financial burden of the companies to some extent.

To further incentivise spectrum trading, Trai has recommended that spectrum trading should be permitted in all the access spectrum bands that have been put to auction. It also suggested that the block size for trading in a band should be same as that specified in the NIA of the latest auction held. Analysts said that such a move will provide companies with more options to shop for spectrum. On licence renewal and networth criteria, Trai said it may not be fair to ask the operator to close down its services on expiry of service licence merely because it is not meeting the minimum net worth condition of unified licence (UL). Such a step, Trai said, will save the subscribers from any inconvenience as well as not put at risk the investment made by a company.