Telecom giants Singapore Telecommunications (SingTel), which owns 32.24 percent stake in Bharti Airtel, and its rivals Vodafone and Reliance Communications are aiming for better fortunes in India through consolidation.
Vodafone plc of the U.K., which will be receiving around $130 billion by exiting from its joint venture from Verizon Wireless, has around 5 percent stake in Airtel, India’s #1 telecom operator.
Vodafone never publicly stated that it wanted to increase its stake in Sunil Mittal-promoted Bharti Airtel through a merger. But the latest war chest will allow Vodafone to buy telecom assets in India. Vodafone, after finalizing the deal with Verizon Wireless, said it would invest in telecom infrastructure for further growth.
SingTel’s pitch for consolidation – through Bharti Airtel – in India is very important as the the government-owned Temasek-promoted telecom giant wants to grow faster in India as it faces revenue dip in Singapore and Australia.
There are 3-4 telecom assets available on the merger and acquisition stable.
Telecom industry analysts say Reliance Communications could be a part of Reliance Jio Infocomm. AT&T buying a stake in Reliance Jio cannot be ruled out. Also, 2-3 telecom giants may show interest in the next round of spectrum auction to enter or re-enter Indian telecom market.
Telenor wants to expand in India. It could associate with Aircel or MTS India. Videocon may become a potential M&A target.
Tata Teleservices and Telenor are in different stages of discussions for a possible alliance.
The Aditya Birla group-owned Idea Cellular has enough cash flexibility to buy telecom properties.
According to a report in Economic Times, SingTel Chairman Simon Israel has urged Airtel to lead the consolidation drive in the domestic telecom market and said it will support such moves.
Earlier, Vodafone India CEO Martin Pieters said his company saw itself as a natural consolidator in the domestic sector.
Recently, Reliance Communications chairman Anil Ambani said it would look at M&A route to expand presence in India.
The government will come out with its new telecom M&A policy in the next couple of months. The telecom industry is eagerly waiting for next round of announcements by telecom minister Kapil Sibal.
The aggression shown by telecom giants in India reflects the recently announced expansion plans of smartphone vendors like HTC and Sony Mobile. HTC is getting ready to double its retail presence to 7,000. Sony Mobile on Wednesday said it would expand retail presence to 8,000 this fiscal. Samsung, on the other hand, will gain further smartphone market share thanks to the launch of new products at different price points.