Paving the way for consolidation in the telecom industry through mergers, de-mergers and acquisitions, the government has amended cellular and basic service licences clause.

It has, nonetheless, put in place the necessary competitive safeguards.

While allowing cellular and basic service providers to de-merge licences, the department of telecommunication has prohibited acquisition within the same service area (intra-circle) by amending a clause relating to 'transfer of licence.'

A notification to this effect has been issued by DoT and sent to all the telecom players.

Permission to de-merge licence would enable various service providers to sell their stake, partially or totally, in different circles, DoT sources said.

This means a company having a licence for cellular services in four different circles or states can now form four separate entities and sell them, a flexibility which was not permitted earlier.

The government has also amended the clause relating to time period of five years for sale of equity. Till now no company was allowed to sell stake before the expiry of five years of licence, DoT sources said adding this clause has now been withdrawn.

Besides this, government has said that all unfulfilled obligations like rollout would get transferred to the new licencee.

Any company having presence in a particular circle cannot acquire another licence in the same circle as it could lead to a monopoly-like situation and also due to spectrum constraints.