The Department of Telecommunications (DoT) has issued the much-awaited guidelines for merger and acquisition (M&A) in the telecom industry. Under the new guidelines, the merged entity’s market share should not exceed 50 per cent.

Market share will be determined by the market share of both subscriber base and adjusted gross revenue of licence in the relevant market. As per the M&A norms, in case the merger or acquisition or amalgamation proposals results in market share in any service area(s) exceeding 50 per cent, the resultant entity should reduce its market share to the limit of 50 per cent within a period of one year from the date of approval of merger or acquisition or amalgamation by the competent authority.

Further, the total spectrum held by the merged entity shall not exceed 25 per cent of the total spectrum assigned for access services and 50 per cent of the spectrum assigned in a given band in the concerned service area.

According to the guidelines, the buyer company at the time of merger shall pay to the government the differential between the entry fee and the market determined price of spectrum from the date of approval of such arrangements by the national Company Law Tribunal or Company Judge on a pro-rata basis for the remaining period of validity of the licences.

A time period of one year will be allowed for transfer or merger of various licences in different service areas in such cases subsequent to the appropriate approval of such proposal by the tribunal or company judge.