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NTA working on merger policy


KATHMANDU, APR 03 -

The Nepal Telecommunications Authority (NTA) has been studying a draft policy on merger and will recommend to the Ministry of Information and Communications to formulate guidelines to govern merger and acquisition of telecom companies.

The draft policy was prepared by a five-member committee led by former law secretary Madhav Paudel. It has recommended making provisions for merger between telecom operators with some changes in the Telecommunications Act 1997.

“The committee has concluded its task by pointing to the need for legal provisions for merger and acquisition in the telecom sector,” said Kailash Prasad Neupane, NTA spokesperson and a member of the committee. He added that the NTA board would send a proposal to the Ministry of Information and Communications for introducing a merger policy following necessary discussions over the matter.

However, Neupane did not mention the necessary requirements and conditions for merging telecom operators. A source at the Ministry of Information of Communications said that the planned policy would not permit mergers that would lead to the creation of a monopoly in the telecom industry.

Earlier, two studies carried out on rural telecom service and rural operators had also suggested to the government to create provisions for merger and acquisition to help small rural telecom operators to survive, expand their services, create competition and give a choice of service to consumers.

The parliamentary Public Accounts Committee (PAC) in its report on the telecom sector had also asked the government to make legal provisions for merger of interested telecom operators.

The source said that mergers had become necessary to create competition mainly in the mobile service sector. “The government is mulling introducing a unified licensing provision based on which small operators would be allowed to operate mobile service nationwide too for which they would need a huge investment,” the source said, adding that the merger provision would support mainly small rural operators.

“The merger option is good for operators needing huge recourses for service expansion,” said Subash Bajracharya, CEO of Smart Telecom, a rural telecom operator. “However, its effectiveness lies in the conditions and use of spectrum already assigned to the operators being merged.”

As per an NTA study carried out on rural telecom service operators and their situation last year, the government should allow a merged operator to use the spectrum that has been assigned earlier for five years from the date of the merger. The study has also recommended to the government to implement a spectrum re-farming system.

 

Posted on: 2012-04-03 09:03