The government is considering allowing intra-circle merger and acquisitions in the telecom sector, subject to the presence of minimum three service operators in a particular circle.

"The case for intra-circle merger and acquisitions is being looked into. The efforts will be made to see that there are no monopolies while these telecom companies remain financially intact," Union Communication and IT Minister Arun Shourie said at a consultative meeting of the ministry in New Delhi on Monday.

Shourie said that one of the ways could be that there were minimum three operators in a circle and nobody had more than 30 per cent of the spectrum.

Giving an outline of the future policy initiative in spectrum, the minister said that efforts would be made for a unified license regime over a period of time without actually hurting the existing licensees.

He also announced that the state owned Bharat Sanchar Nigam Ltd would start offering the wireless in local loop mobile phone at a maximum of Rs 20, which would be charged only as an insurance amount.

"Benefit of the policy initiatives taken by the government have engineered fierce competition among the service providers which has benefited the customers," Shourie said, adding that in this era two state-owned PSUs, BSNL and Mahanagar Telephone Nigam Ltd, have been given full freedom to compete.

Last month, the Department of Telecommunication had issued terms and conditions for the merger and acquisitions in the inter-circle but the industry, especially the cellular operators, had expressed interest in intra-circle mergers.

Shourie also said that to promote transparency and avoid controversy, BSNL and MTNL are coming out with a purchase manual, which would be released on Tuesday.

On rural telephony, the minister said that the new technology options have to be looked into to provide telecom services, especially in view of the fact that to provide telephones in the rural areas on individual basis would be a continuously loss making proposition.

He also indicated that the DoT would sign a memorandum of understanding with Railtel to utilise the wide network of Railways.