"It is felt that the existing provision of 67 per cent market share will create non-competitive or monopolistic situation. It is, therefore, suggested that this limit should be brought down to about 40 per cent," the PSU said responding to TRAI consultation paper on licensing norms review.

However, cellular company Vodafone Essar, which has recently acquired the number two slot in terms of subscriber base, said, "we are of the opinion that the 67 per cent limit is appropriate when applied to a narrow mobile market definition.

"But (under the) regime of the current M&A guidelines, not a single intra-circle merger between licensees has taken place to date and it cannot be said that the current guidelines have produced an environment of undue consolidation. The guidelines, therefore, remain appropriate," Vodafone Essar added.

CDMA player Tata Teleservices [Get Quote] wants this cap to be at 45 per cent. "We recommend a maximum market share of 45 per cent for the merged entity," the company said. Its rival Anil Ambani's Reliance Communications [Get Quote] recommends that any merger resulting in market share of more than 40 per cent in terms of the subscriber base and AGR with the merging entity should not be permitted.

The PSU also wants fixing a maximum spectrum limit that would be held by a merged entity. It also does not want any merger to be allowed between a CDMA and a GSM company. Vodafone Essar said the merged entity should have a spectrum limit.

There is no issue as far as merger of entities having same technology networks is concerned, BSNL said. The spectrum of the merged entity should be worked out based on the total subscriber base on the date of merger.

Extra spectrum available with the entity should be withdrawn within a period of six months from the actual date of merger. In the case of CDMA or GSM merger, it may be noted that the two networks cannot be merged. Accordingly it shall be a case of non- plausible merger, it said.

Therefore, it is proposed that this kind of heterogeneous merger should not be permitted. However, if such a merger was permitted then the total spectrum requirement in CDMA and GSM bands should be calculated separately, assuming that the combined subscriber base is to be served by either CDMA or GSM, BSNL said.

The lower of the two bandwidths should only be permitted to the merged entity. The choice of distribution of the bandwidth between GSM and CDMA should be left to the merged entity, BSNL added.