India has set revised rules for mergers amongst telecoms firms in the fast growing sector, restricting the market share of the joint entity to 40% of the country's subscriber base, a Reuters report said.
The Reuters report said India has 12 firms providing wireless and fixed-line telephone services in some or all of its 23 telecom service areas to over 290 million users and has issued 120 new licences this year.
More than 8 million new mobile phone subscribers are joining up each month, lured by a growing economy, cheap handsets and low call rates.
India now has more than 250 million mobile users.
Mergers will not be permitted if they lead to the number of service providers in a zone falling below four, the telecoms ministry, quoted by the Reuters report, said.
They will also not be allowed among companies which have had licences for less than three years, it added.
No single firm or person will be allowed to hold more than 10% in more than one service provider in a zone, the ministry said, maintaining a long-standing policy, the report said.
The merged entity will be allowed to retain all the wireless spectrum of the merging firms, but the new firm must meet the subscriber numbers required for that quantum of spectrum.
The government's rules are broadly in line with the sector regulator's proposals, presented in August 2007.