The Telecom Regulatory Authority of India (TRAI) has put forth recommendations to the Department of Telecommunications (DoT) that effectively increase the cost of additional spectrum for telecom operators, and reduce the possibility of big ticket mergers and acquisitions:

M&A Policy:
- No M&A activity allowed if post-merger, less than four operators remain in the relevant market.
- The market share of the merged entity in the relevant market should not be more than 40 percent of subscriber base and/or revenue.
- Operator cross-holdings: Acquisition of equity capital up to 10% of a telecom licensee by another operator shall be permitted automatically. Beyond that, up to a maximum of 20 percent, will need to be approved on a case by case basis.
- Existing cap of 2x15 MHz per operator per service area for metros and category A circle and 2x12.4 MHz per operator per service area in category B and C circle applicable for a post merger entity shall be removed for purposes of regulating M&A activity.

Spectrum Policy:
- No cap on number of operators in any area
- For a GSM operator to get more than 10 MHz of spectrum, they now need double the number of subscribers (up from 1 million to 2 million). [via Mint]
- A one time charge of Rs. 160 million for operators wanting spectrum beyond 10Mhz in Mumbai, Delhi and Category A circles
- Annual spectrum charge will be linked to operator revenue, as follows:

this means an increase in annual spectrum charges by 1 percent, and hence could result in an increase in tariffs (via Telegraph)
- Mint reports that since CDMA operators are now required to get in line if they also want a GSM licence, their chances are minimal since there are already over 100 applicants waiting for a licence in 22 circles.

As per a report on CNBC-TV18, Airtel’s margins are expected to be affected by 25 basis points. You may download the TRAI recommendations (178 pages) here, or try the (shorter) press release here.