India proposes easing of telco mergers

Combined market share of merged operators extended from 40 percent to 60 percent, which will drive merger and acquisition activities in highly competitive Indian market, say reports.

A new proposed policy in India aims to expand the maximum combined market share of merged carriers, a move which some predict will increase mergers and acquisitions in the country's competitive telecommunications market.

The National Telecom Policy, which will be submitted to the Communications Minister Kapil Sibal for review within a week, proposed increasing the maximum market share of a merged phone company from 40 percent to 60 percent, according to a report Tuesday by BusinessWeek which quoted India's Telecom Commission chairman, R. Chandrashekhar.

Under the new proposal, mergers between operators that have a combined market share of 35 percent or less will not need anti-monopoly approval. However, merged companies with a combined share of 35 percent to 60 percent in a telecommunications circle will still need to seek regulatory approval, said BusinessWeek. The country is divided into 22 circles.

A Times of India report noted that competition for mobile customers is stiff in India as there are more than a dozen operators in a circle, leading to a tariff war. For an operator's business to be profitable, there ideally should be five to six operators in an operation area, noted the local paper, which cited telecom company executives who gave their estimates based on global experiences.

BusinessWeek noted that the proposal would still need clearance from the cabinet and parliament--a process that might take up to June.