The Empowered Group of Ministers (EGoM) on telecom, yesterday approved the mergers and acquisitions (M&A) guidelines, besides clearing the sale of over 400MHz of 2G spectrum (1800MHz band), a move that would help further growth and consolidation of the cellular phone market in the country. The addition also means that an average 18MHz of spectrum will be up for sale in each circle -enough for three to four operators.
At its meeting, the EGoM, headed by union finance minister P. Chidambaram, also approved payment of market rates for spectrum above 4.4MHz allotted to the acquired entity. An acquirer will have to pay the differential between the auction determined market price and the administrative price for anything beyond 4.4MHz in the GSM band and 2.5MHz in CDMA, if an acquired company has got spectrum after paying administrative price. The M&A guidelines will now be sent to the Union Cabinet for its approval.
The ministers also agreed to increase the earlier-proposed 35% cap on market share (in revenue, as well as user base) for merged entities in a circle to 50%. However, if a merged entity breaches this 50% ceiling in any circle, the companies will get a year to lower the share to below 50%. On the three-year lock-in period during which companies are not allowed to transfer equities, the ministerial panel decided to maintain the status quo for now.
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