India Telecom Panel Approves Plan to Ease Mergers Between Wireless Rivals

By Ketaki Gokhale and Santosh Kumar - Dec 27, 2011 1:02 PM GMT+0700

India’s telecommunications commission approved increases in available wireless spectrum, sharing and trading of airwaves and steps to make it easier for mobile phone companies to buy rivals.

The National Telecom Policy would increase the maximum market share for a merged phone company to 60 percent from 40 percent, R. Chandrashekhar, telecommunications commission chairman, told reporters in New Delhi yesterday. The commission will submit its draft to Communications Minister Kapil Sibal for review within a week, he said.

The new regulations may lead to consolidation in a market where competition among 15 carriers including Bharti Airtel Ltd. (BHARTI) and local ventures of Vodafone Group Plc (VOD), Telenor ASA (TEL) and NTT DoCoMo Inc. pushed the lowest call charges to less than one penny a minute, eroding profitability. Carriers need more spectrum to offer broadband services that enable wireless video streaming and data downloads.

The proposals would allow spectrum auctions and would limit a merged company to holding 25 percent of the available airwaves, Chandrashekhar said. The country has 22 telecommunications zones.

Mergers between carriers that would have a combined market share of 35 percent or less would no longer need anti-monopoly approval under the proposed rules. Combined companies that would control between 35 percent and 60 percent of a zone’s wireless phone market would be subject to such approval, according to the policy draft approved today.

The National Telecom Policy, initially introduced in October, would also require cabinet clearance and some portions may need parliamentary approval.

India’s wireless market will surpass 872 million active users by the end of 2015, research firm Gartner Inc. forecasts, compared with 626 million in October.

The proposals may win final approval by June, according to a Dec. 23 review by the Department of Telecommunications.

To contact the reporter on this story: Ketaki Gokhale in Mumbai at kgokhale@bloomberg.net

To contact the editor responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net.