The Telecom Regulatory Authority of India (TRAI) has recommended clear regulations on mergers and sharing of spectrum between licensees in the country.

The recommendations come two months before the government is scheduled to announce the New Telecom Policy-2011. If the Department of Telecom (DoT) accepts the recommendations, the telecom operators in the country will have more clarity of operations relating to sharing of auctioned spectrum for offering undisrupted services to customers through country.

The new rules are expected to help operators consolidate and will help in improving profitability of operators. The central government is looking to overhaul the telecom policy following a spam exposed wrongdoing in the 2G spectrum sale.

TRAI has written a letter to telecom secretary explaining that if a merger would create an entity with up to 35% market share in terms of subscribers and adjusted gross revenue or AGR, it should be considered as safe for the market.

It has also said that mergers that would result in entities with more than market share between 35% and 60% should be referred to it and those with over 60% share should not be considered at all. TRAI has placed a limit of 25% for spectrum holding for any entity emerging from a merger. The same conditions would apply to spectrum sharing between two licensees as well.

“As advised, TRAI would initiate a consultation process on the subject and would forward its recommendation to the government in due course,” wrote TRAI.