DNA Money Edit: Telecom M&A policy needs to be revamped

The policy around merger and acquisitions (M&A) in the telecom space needs a total revamp. The acquisition of Indian operations of Norway's telecom firm Telenor by Airtel has taken almost fifteen months for all the approvals. A merger between Vodafone and Idea Cellular, which will create the largest telecom entity in India, announced in March 2017 is still pending.

The government has shown willingness to look into the issues around M&As in the draft of the new telecom policy 2018. A senior government functionary recently said the past legacy issues, which have been a challenge for the ease of doing business, will be looked at and there will be discussions with the industry on how to speed up the entire M&A process.

But, experts say this development has come quite late as the consolidation phase triggered by the entry of new player Reliance Jio is on the verge of the completion. Smaller/marginal players, which were once the poster boys of Indian growth story, have exited the telecom market. Telenor has exited the market completely, while Russia's Sistema merged its telecom business in India with Reliance Communications. Aircel has filed for bankruptcy after its merger talks with RCom didn't fructify. RCom, itself, is now struggling to keep its business afloat and has announced to sell off its wireless business to Mukesh Ambani's Reliance Jio.

The industry is struggling with high level of debt and falling margins and revenues. The telecom industry together has piled on a cumulative total debt of around Rs 7.7 lakh crore. There have been some relief given by the government on spectrum holdings by the operators. But, overall, the whole process of getting clearances and approvals from multiple agencies needs to be streamlined to make it a smooth affair.