Telecom M&As are waiting to happen, but Archaic Regulations are Preventing them from happening. The new Telecom Policy 2011 should provide some reprieve and foster healthy, and less severe competition in the sector
The telecom sector in India is still governed by the old and stale National Telecom Policy (NTP), which was announced in 1999, though much water has flowed under the bridge since. India has more than 800 million subscribers. Today, the country is the second largest telecom market in the word after China and the third most attractive Foreign Direct Investment (FDI) destination. As per the Department of Industrial Policy & Promotion, Ministry of Commerce and Industry, India attracted $10.5 billion in cumulative telecom FDI from April 2000 to January 2011. Telecom is attracting the largest FDI after services and the IT industry.
Telecom M&As in India gained momentum in 2008, when the government decided to award new telecom licences. Japan’s telecom major NTT DOCOMO acquired 26% stake in Mumbai-based Tata Teleservices (TTSL). The company is likely to buy into a Rs.30 billion rights issue by TTSL. Similarly, Telenor Group of Norway acquired a 67.25% stake in Unitech Wireless for $1.36 billion and Etisalat DB took up 45% stake in Swan Telecom for $900 million; the two deals that really fuelled the 2G spectrum controversy. In 2009, Bahrain Telecom acquired 49% stake in S-Tel for $225 million. Operators like AT&T, Telekom Italia are still looking to invest in India. But M&A activity on the domestic front has been negligible. Though the number of players in the sector has touched 15 unlike the global average of 3-4, consolidation is still not on us. The top six players command a subscriber share of over 86%, while the remaining 9 have less than 14%. Idea’s merger with Spice and Reliance Industries’ 95% stake buy in Infotel Broadband for $1.03 billion are the two major domestic M&As in the past few years.
Telecom M&As in India gained momentum in 2008, when the government decided to award new telecom licences. Japan’s telecom major NTT DOCOMO acquired 26% stake in Mumbai-based Tata Teleservices (TTSL). The company is likely to buy into a Rs.30 billion rights issue by TTSL. Similarly, Telenor Group of Norway acquired a 67.25% stake in Unitech Wireless for $1.36 billion and Etisalat DB took up 45% stake in Swan Telecom for $900 million; the two deals that really fuelled the 2G spectrum controversy. In 2009, Bahrain Telecom acquired 49% stake in S-Tel for $225 million. Operators like AT&T, Telekom Italia are still looking to invest in India. But M&A activity on the domestic front has been negligible. Though the number of players in the sector has touched 15 unlike the global average of 3-4, consolidation is still not on us. The top six players command a subscriber share of over 86%, while the remaining 9 have less than 14%. Idea’s merger with Spice and Reliance Industries’ 95% stake buy in Infotel Broadband for $1.03 billion are the two major domestic M&As in the past few years.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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IIPM: Indian Institute of Planning and Management
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
