extra payment because the 2001 price was also market-discovered.
Analysts also contend that the auction-determined price arrived after the spectrum sale in February may not be a fair market price for the resource. “Latest auctions were held at a time when operators' licences were about to expire; so, they were compelled to participate in the sale. Asking merging entities to pay the differential based on this discovered price would put additional burden on the telcos and the sector may not be able to accrue the full benefits of consolidation,” said Hemant Joshi, partner, Deloitte Haskins & Sells.
The positive contents of the norms allow the merged entities to have 50% market share in all circles, both in terms of subscriber base and adjusted gross revenue (AGR).
To calculate market share of telcos, subscriber base as of December 31 or June 30 of each year and AGR as on March 31 of the preceding year will be taken into account.
The other positive feature is that the merged entity can hold up to 25% of the total spectrum assigned for access services and 50% spectrum assigned in a given band for each circle.
Companies holding 3G spectrum will also be allowed to retain two blocks of the high speed radio waves per circle in any resultant entity post merger, a move which was welcomed by the operators.
The resultant company after a merger will have to abide by the three-year lock-in period which bars telecom companies from transferring equities within three years of buying spectrum from an auction. The lock-in period will apply in respect of new shares that might be issued in respect of the resultant company (transferee company).
The norms also allow the merger of internet service provider and mobile phone licences as mobile operators can also offer internet services under the unified licence.