Info-tech

TRAI moots reforms in transfer, merger norms for telecom licences

PTI New Delhi | Updated on February 21, 2020 Published on February 21, 2020

The norms on transfer/merger of licences should be linked with the relevant clause of the licence   -  bluebay2014

Regulator’s suggestions range from market share math to approval timelines, and other terms

In a bid to reform norms for transfer and merger of telecom licences, TRAI on Friday suggested that while both subscriber base and revenue are considered in determining market share for mobile and internet service providers, only revenue should be taken into account in market share calculation for other services such as national and international long distance telephony.

The sector regulator also suggested that the one-year timeline currently allowed for transfer/merger of licences in different service areas after National Company Law Tribunal nod should exclude time spent by companies in pursuing any litigation on account of which the final approval of a merger is delayed.

TRAI recommended that the guidelines on transfer/merger of licences should not ‘hard-code’ (that is, explicitly specify) the spectrum caps. Instead, it should be linked with the relevant clause of the licence, it said.

Computing market share

The Telecom Regulatory Authority of India (TRAI) has now released its recommendations on reforming the guidelines for transfer and merger of telecom licences, after the telecom department in May 2019 sought its views on enabling simplification and fast-tracking of approvals.

TRAI’s suggestions range from market share math to approval timelines, and other terms.

It noted that the guidelines should be seen in the backdrop of consolidation in the market from 12-14 service providers a decade ago to four operators now, the National Digital Communication Policy’s thrust on speedy approvals and the delays in mergers being taken on record.

“The authority recommends that for computing market share of an NSO (Network Service Operators) in the relevant market, market share of the VNO (virtual network operator) parented with it should be added to the market share of NSO, if the NSO is a promoter of VNO,” TRAI said.

The virtual network operators can provide telecom services like mobile landline, internet, but only as a retailer for full-fledged telecom operators.

“For calculation of one year that is time period allowed for transfer/merger of various licenses in different service areas subsequent to the approval of the Tribunal/Company Judge, the time spent in pursuing any litigation on account of which the final approval of a merger is delayed, should be excluded,” TRAI said.

This would protect the rights of a telecom operators to pursue remedies in court and also ensure that the period of one year does not become redundant for no fault of companies on account of pendency of an issue before a court, one of the stakeholders cited by TRAI had submitted.

Another provision of the acquisition guidelines which provides an exemption from substantial equity/cross holding clause for a period of one year or more should be modified such that the said exemption is provided only for a period till transfer/merger of licence is taken on record by the licensor (telecom department), TRAI recommended.

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Published on February 21, 2020
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