Tatas respond to merger norms

The maximum permissible market share limit for merging companies should be around 45 per cent, while the maximum spectrum for merged entities should continue at 15 Mhz, according to Tata Teleservices Ltd (TTSL).

The CDMA-based service provider has also suggested maintaining a 10 per cent cross ownership limit in a licence area.

TTSL has suggested adherence to the international practice of recognising 40-50 per cent as indicative of market dominance and has recommended that the maximum market share a merged entity can hold should be 45 per cent.

The Tata group company was responding to the Telecom Regulatory Authority of India's (Trai) consultation paper on 'Review of key licence conditions and capping of number of access providers'.

According to the present regulations in the country, two merged entities can have a marker share of upto 67 per cent in a circle.

The CDMA service provider has also recommended that there should be a cap on concentration ratio at 75 per cent, to avoid formation of two dominant forces that control the market (duopoly).

At present, there is no concept of concentration ratio, which is calculated on basis of the population in the circle.

On the issue of maximum spectrum that should be held by merged entities, TTSL was of the opinion that the 15 MHz cap on the spectrum that should continue.

It also suggested an allocation of an upfront 10MHz of spectrum each.

"If there is inadequate spectrum in the existing spectrum bands, then the additional spectrum must be allocated to the licensees in other globally aligned bands.

Such a situation is not unprecedented in India; GSM operators were given additional spectrum in the 1800 MHz band, when they fell short of spectrum in the 900MHz band," the reply said.

On existing substantial equity clause on the 10 per cent limit of cross ownership, the company was of opinion that the present clause should be maintained.

A promoter of a licensee company in the service area should not be allowed to hold any equity in any other licensee company in the same service area.

On the conditions for mergers and acquisition, like spectrum caps and market share, companies belonging to the same group must be treated as a single entity.

It also called for a comprehensive and technology neutral spectrum policy and said this will encourage competition and create additional choices for the consumer.