DoT hoping to announce new mergers and acquisitions guidelines in January

With foreign investment dropping by a steep 96 percent in 2012, the Department of Telecom is hoping to announce the new M&A guidelines next month as it attempts to infuse life into a sector battered by controversies.

After a two year run-in with controversies, telecom sector now looks stable and seems back on its feet with initial investment proposal of over Rs. 11,000 crores received in 2013.

While government is hopeful of announcing mergers and acquisitions guidelines in January and a new policy on machine-to-machine communications in first quarter of 2014, in 2013 it was able to implement the new unified licensing regime, open up telecom sector for foreign investment by raising FDI limit to 100 percent from 74 percent.

(Also see: Government approves 100 percent FDI in telecom sector)

"We want to put mergers and acquisition guidelines in place before (spectrum) auction takes place. The year 2013 was basically a year which prepared this sector for huge growth in coming years a foundation year. Sector in 2014 is poised for a very positive growth riding on very good sentiments," Telecom Secretary MF Farooqui told PTI.

The secretary said that de-linking spectrum from telecom licences, introduction of Unified Licences and raising of foreign direct investment limit were key steps that government took for the sector during the year.

(Also see: DoT amends unified telecom licence, removes 'forced migration' clause)

"It (100 percent FDI) may immediately not result in influx of investment. It actually did, but even without it in terms of improving sentiments, it made an important contribution. It made people look at fresh opportunity in terms of investment in the sector," Farooqui said.

The government in August approved 100 percent foreign direct investment (FDI) in the telecom sector, meeting a key demand of the fund-starved industry. Earlier, the FDI cap in the sector was at 74 percent.

FDI during April-September 2013 period was only at Rs. 197 crores. The month of March, this year, saw poor performance of spectrum auction with only one company, Sistema Shyam Teleservices, bidding for CDMA spectrum worth Rs. 3,639 crores.

Within three months of the decision on FDI, UK's telecom major Vodafone Group approached Foreign Investment Promotion Board (FIPB) to increase its holding in Vodafone India Ltd (VIL) from 64.38 percent to 100 percent with an investment of Rs. 10,141 crores.

(Also see: Vodafone seeks regulatory approval to take full control of its Indian unit)

"There is progress in the regulatory environment there are reasonable expectations on the sector which I think is positive, so it's sending a positive message about the country and about the desire to really push forward," Vodafone Group's Chief Executive Vittorio Colao said. Vodafone's investment is yet to be approved by the government.