Coming soon, exit options for telecom companies

Some broad contours of the National Telecom Policy 2011 (NTP-11) seem to be emerging after several rounds of discussion with stakeholders and brainstorming among telecom department (DoT) officials.

A top DoT official said consolidation in the sector, which has been bleeding due to intense competition as a result of overcrowding in many circles, is being given serious consideration.

The government feels the number of players in a circle should ideally come down from the current 13-14 to 3-4. This, the DoT official said, would lead to optimum utilisation of spectrum and rationalisation of tariffs.

The idea, therefore, is to facilitate consolidation by framing guidelines for exit. “You have to give exit options to players who are finding it difficult to sustain operations,” said the official.

He said the demand for exit option was mostly coming from new players, who were feeling trapped after investing huge funds in their circles. “Many of them are victims of predatory pricing by legacy players. If they are given exit option, it would help to recover their investment.”

Another suggestion that has communication minister Kapil Sibal’s backing is spectrum sharing. The ministry is also looking at spectrum trading.

But as of Tuesday, DoT officials could not take a firm stand on the way forward. “Even though broad contours of the policy coming to shape, there is still no consensus of many issues. But the government is confident of coming out with NTP-11 by year-end,” said the official.