Vodafone and Idea Cellular will not get any special treatment post-merger and the combined entity will have to comply with existing rules on revenue, subscriber and spectrum caps, Government said on Thursdday.
Telecom Minister Manoj Sinha asserted that the ministry will work with sectoral regulator TRAI to ensure policies are in place that balance consumer interest with the financial health of the sector.
On Vodafone and Idea Cellular merger -- which is set to create India’s largest telecom operator displacing Bharti Airtel from its current pole position -- the Minister said if the merging entities do not adhere to the rules, they would not be allowed to proceed.
“They have to comply,” he told reporters on the sidelines of an event to release commemorative postage stamp on Cub Scouts.
Asked if there would be any special consideration for the mega merger, the Minister said, “No, nothing”.
Telecom analysts have been flagging certain hurdles in the deal, including breach of revenue market share, subscriber and spectrum caps in five markets.
“There are already parameters in place...That in the next one year, if your revenue or subscriber numbers are more (than the permitted ceiling) they will have to reduce...They will have to comply,” Sinha said.
He said there is no danger of cartelisation in the sector despite the ongoing consolidation, given that each service area will still have 5-6 players post the M&A phase. Also, guidelines are in place to ensure that a single operator does not have a dominant position.
“Here there were many players...Where competition is concerned as long as there is BSNl, competition will be ensured. After consolidation also, 5-6 players in each of the service areas will remain, so there cannot be cartelisation,” he said, pointing to the global norm of 4-5 players across telecom markets.
Necessary guidelines in the form of revenue, subscriber and spectrum caps are already in place to ensure a healthy competition, he noted.
“We already have guidelines in terms of 50 per cent revenue, and 50 per cent customers cap...Spectrum cap is also there...So, to ensure a healthy competition in the sector, necessary precautions are already in place...There is no danger of cartelisation,” the Minister said.