Telecom mergers given green signal

NEW DELHI: India approved rules allowing telecom operators to buy local rivals in an attempt to encourage consolidation of the booming but fragmented industry.

The guidelines released by the Telecom Department said companies would be allowed to buy rivals within the same operating circle provided their combined market share did not exceed 67 percent.

Previously they were only allowed to buy companies outside their circle. India's flourishing telecom industry, one of the fastest growing markets globally, is carved up into 23 circles or zones, each covering a state or a large city.

The most competitive circles, such as New Delhi, have six companies providing mobile and fixed-line services.

"In order to ensure that sufficient competition exists, merger of licenses will be permitted subject to the condition that, post merger, there are at least three operators in that service area for that service," the guidelines said.

India has more than a dozen telecom companies, many of them unprofitable. Analysts say the number is too high by international standards and expect takeovers within the medium term.

Its biggest mobile operators include Bharti Tele-Ventures, Reliance Infocomm, which is owned 45 percent by Reliance Industries Ltd and Tata group.

© Reuters