The move comes after a few rounds of revision of the draft M&A guidelines for the sector during the past few months.
The M&A policy for the sector is expected to be finalised before the next round of auction, scheduled for January 8, 2014.
According to the final draft, dated October 17, DoT said as the cap for spectrum holding is 50 per cent in a band for access services, transfer of licences consequent to compromise, arrangements or amalgamation of companies shall be allowed where market share for access services in respective service area of the resultant entity is up to 50 per cent.
The country’s top three telcos by subscriber base -- Bharti Airtel, Vodafone India and Idea Cellular -- together hold 54 per cent market share.
All the private telcos together control 88 per cent of the cellular market.
Earlier, the Telecom Commission had said the cap would be 35 per cent.
The Telecom Regulatory Authority of India had earlier recommended allowing between 35 per cent to 60 per cent.
In its earlier draft, DoT had mentioned it could consider merger proposals that result in more than 35 per cent market share on a case-to-case basis.
It has been decided in-principle to allow trading of spectrum, says the final draft.
DoT has, however, retained the clause that would make the companies pay for spectrum beyond a prescribed limit if it was acquired after paying the entry fee and not through auction.
If a transferor company holds a part of spectrum which (4.4 MHz for GSM and 2.5 MHz for CDMA) has been assigned against the entry fee paid, the transferee (acquiring) company or the resultant merged entity, at the time of merger, will be required to pay to the government the differential between the entry fee and the market-determined price of spectrum, pro rata for the remaining period of the validity of the licence, according to the revised draft.
However, there will not be any separate charges for spectrum acquired through auctions from 2010.
But, as the auction-determined price is valid for a year, the government will add the prime lending rate of the State Bank of India to the previous auction-determined
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