In the countdown to 3G auctions, DoT (Department of Telecom) is busy framing regulations for 3G bidders to seek effective competition in future. In a move that could drastically hamper the future mergers and acquisitions in Indian telecom sector, DoT is expected to unveil a new regulation disallowing the merger of any 3G winners.
The non-merger clause will be embedded in notice inviting application(NIA) and thus will be a binding agreement for telcos. Telecom players will need to adhere to this clause before there bids are successfully accepted.
This simply means that all current telecom players winning 3G licenses will forfeit their rights to merge with any other telecom operator. This regulation seems good for overall competitiveness in 3G services as limited availability of slots mights have started a wave of 3G related mergers & acquisitions.
The DoT will also auto-extend the telecom licenses of current telecom operators by more than 20 years if they win 3G auction. It is to be noted that telecom licenses of Bharti Airtel, Vodafone will expire sometime in 2014 and that’s when all lifetime connections distributed by them expires.
The tensions are still cropping up within DoT as they wants to auction the maximum number of slots for the 3G auction but are not adequately supported by defence department. Defence department at the same time has conveyed that they can only release spectrum adequate for 2-3 slots rather than DoT’s demand for 4 slots.
3G auctions are scheduled to held in Mid-Feb this year with base auction prices of Rs.3500 crores for pan-India 3G license. The 3G auction prices are expected to touch upwards of $1 billion in wake of limited slots and entry of foreign players.
