New Delhi, April 22: The government on Tuesday made mergers and acquisitions in the telecom sector difficult, by making it mandatory for companies to obtain pre-amalgamation approvals and at least four service providers to be present in a circle. The Department of Telecom also said no operator would be allowed to transfer fresh spectrum or radio frequency allocated to it for three years from the date of issue.

Announcing the revised norms for intra-circle merger, the DoT said: "Any permission for merger shall be accorded only after completion of three years from the effective date of the licenses." The earlier norms were issued in February 2004. This lock-in will effectively seal the chances of new and small operators merging with big players in a circle immediately and most importantly the transfer of spectrum. COAI Director General T V Ramachandran told a news agency.

"I do not see any major aspect in the guidelines that would facilitate consolidation in the sector." The guidelines said: "Prior approval of the Department of Telecommunications shall be necessary for merger of the license." Earlier companies before merger would have to intimate DoT and wait for the approval after undergoing merger. For regulating acquisitions of equity stake of one access services licensee in the enterprise of another access services licensee in the same license area, present guidelines on 'Substantial Equity' (10 per cent equity or more) shall continue. TRAI had proposed it to be raised to 20 per cent. "The revised guidelines, it is hoped, will increase competition within the service area and will lead to better utilisation of services," said DoT.