Looking ahead to the new telecom M&A policy

Pressure on average revenue per user and the fragmentation of spectrum allocation is driving consolidation in the Indian telecom industry. In this article, we review recent regulatory developments and certain key issues expected to feature in the eagerly awaited telecom M&A policy.

Recent developments

There have been two recent key regulatory developments of note.

The first is the liberalization of the foreign direct investment limit for telecom services companies from 74% to 100% under the “approval route”. This will offer international telecom companies operating in India the ability to buy out their Indian minority shareholders with government approval.

The second development is the introduction of the “unified licence” regime in August. This enables provision of multiple telecommunication services under a single licence. It also de-links the allocation of spectrum from the grant of licence for providing telecom services and prohibits direct or indirect cross-holdings by a licensee or its promoter (holder of 10% of the equity in the licensee).

Nikhil Narayanan is a partner and Rohit Ambast is an associate at Amarchand & Mangaldas & Suresh A Shroff and Co, New Delhi. The views expressed in this article are those of the authors and do not reflect the position of the firm.