TRAI’s New 2G Spectrum Allocation and Renewal recommendations along with guidelines for M&A has drawn criticism from all the corners. Lead Institutional Investors, the big financiers for Indian Telecom Sector are unhappy with the recommendations and their reaction is as under,
Though the TRAI recos will need to be accepted by the DoT, we view these recos as negative given the potential one-time outgoes, not so favorable M&A policy and potential for disruption in spectrum allocation during renewals.
The regulator’s recommendations have limited encouragement for industry consolidation. One-time charges and re-farming of spectrum negative for incumbents; new players can obtain additional 1.8MHz immediately.
UBS on M&A,
This recommendation makes it nearly impossible for any meaningful consolidation to happen in the sector. However, smaller players are likely to engage in M&A among themselves.