The Telecom Regulatory Authority of India (Trai) today recommended a liberal norm of up to 35% market share as "safe harbour" for the mergers and acquisition in the Indian telecom sector which has 12-13 service providers in a circle.
"Keeping in view the current context and also the international practice as well as the provisions of the Competition Act, the Authority recommends that upto level of 35% market share, for the resultant entity... As the green line or safe harbour," Trai said.
To ensure a level-playing field among service providers, Trai in its recommendations to the Telecom Ministry has said that if a resultant entity after merger or acquisition commands up to 35% market share, the merged or acquired company would be considered in 'green line' or safe harbour.
This will be considered by the Telecom Ministry while finalising the National Telecom Policy 2011 which is expected to be released by the year-end and early next year.
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Welcoming the move, the lobby of GSM players, Cellular Operators Association of India (COAI) said this is a positive development and would help the market to mature.
"Those falling above 35% and up to 60% [market share for resultant entity] would be referred to Trai for its recommendation, which would carry out detailed examination to ensure that there would not be any abuse of market dominance," the regulator said.
Cases where the resultant entity would have more than 60% market share would "not be considered as all", as these would fall beyond the "Red Line", it said.
The limit for spectrum holding by the resultant entity would be 25% of the spectrum assigned in a service area.
Earlier, the M&A were made difficult as the market share of the resultant entity was capped at 30% and limited increase in spectrum was allowed.