Telecom companies may not any more require the approval of the department of telecommunications (DoT) for mergers and acquisitions.
The Competition Commission of India (CCI) has instead proposed that telcos involved in M&As should report only to the commission as it is best suited to deal with such issues.
The radical proposal will be flagged by the CCI at a meeting with the DoT and the Telecom Regulatory Authority of India shortly. This means that issues like transfer of licences of merged entities will need a green signal from the CCI.
The CCI is of the view that it can examine M&As better than the DoT as its mandate is to deal with issues of competition and monopoly. Further, all M&As pertaining to a certain monetary limit in any case have to be cleared by the CCI to ensure that there is fair competition.
Parliament cleared the Competition Amendment Bill in its monsoon session in August, arming the CCI with statutory powers. The commission is expected to start functioning by the middle of next year.
At present, though telecom firms are free to go in for M&As in step with corporate strategies or market forces, they require the final approval of the DoT since there is a transfer of licence involved. The regulations restrict a company to acquiring not more than 10% stake in another firm offering telecom services in the same area.
Further, the combined market share of any two companies involved in a merger should not be more than 67%. The merged entity can have a maximum of 15 Mhz of spectrum.