Ronnie05's Blog

Indian Telecom Story (Part XXXIV): Telcos mulling “quit” option

Posted in Industry updates by Manas Ganguly on August 31, 2010

The Party is closing. Its curtains for the gate crashers. An undifferentiated approach to the Indian Markets has led to several of the new aspiring Telco wannabees to burn more than just their hands. In an earlier post in the same series of blogs, I had written about how consolidation is setting into the Indian Telecom markets. According to recent article by Economic Times, The telecom department (DoT) is examining proposals that would allow new mobile operators, who were given licences and airwaves under controversial circumstances two years ago, to sell out or exit, paving the way for a possible consolidation in the 14-player domestic telecom market.

DoT is considering exit options after these new players who haven’t been able to find a foothold in the Indian markets have approached the regulatory boy seeking a refund of Rs.1,651 crore entry fee in return for them surrendering their regulatory licences and spectrum to the government. These Telcos are wanting to selectively surrender licences and spectrum in specific circles as they faced ‘several’ constraints, including funding, in launching mobile operations across all 22 geographies in the country.

The other possibility being considered are Merger with larger operators: This will require shortening the three-year lock-in period during which the promoter of a new company cannot sell out, and relaxing rules to allow incumbents to retain airwaves held by these new companies if a buyout or merger were to happen.

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