Telecom Lead Asia: Airtel is the undisputed king in India’s wireless market. But the likely consolidation initiatives by its competitors have the potential to move the Sunil Mittal-promoted company to the #2 rank.
Up for grabs or merger / acquisitions include Tatas (with 8.49 percent market share as on October 2012), Aircel (7.39 percent market share), Uninor (4.54 percent) MTS (1.78 percent).
If the country’s largest mobile service provider — based on subscriber base and revenue — does not go ahead with expansion through an M&A, Airtel with 20.62 percent share will struggle to keep pace with the market conditions. At present, its financial position or balance sheet does not allow to buy another mobile operator without an external assistance / help from SingTel.
If operators such as Vodafone (with 16.94 percent market share), Reliance Communications (14.82 percent) or Idea Cellular (with 12.80 percent share) buy Aircel which is looking for a strategic partner, they can challenge Airtel for supremacy.
A combination between Aircel, MTS India, Uninor and Videocon can create a strong #2 in the mobile market as the merged entity can be disruptive and offer cost effective packages to mobile users. This will be more damaging to Airtel and other players.
The Aditya Birla group promoted Idea Cellular with 12.80 percent share is in a unique position at present as the company enjoys maximum active users based on VLR records.
In the recent two quarters, Airtel and Tata Teleservices shed substantial number of inactive mobile users.
The ailing telecom industry, due to regulatory constraints, will not rule out the intentions of the Mukesh Ambani-promoted Reliance Industries, especially when Infotel Broadband, the 4G arm, was not in the market to buy 2G spectrum in November 2012.
A merger / alliance between Reliance Industries’ Infotel Broadband and Anil Ambani-managed Reliance Communications is also possible. RIL needs strong backbone to ensure successful roll out of 4G across the country. Reliance Communications with more than Rs 38,000 crore debt needs strong financial back up to go ahead in India’s wireless market.
The government could consider divestment of majority stake in BSNL that enjoys the top position in both wireline and broadband markets. BSNL, without 95 percent of its employees, will be a strategic fit for RIL.
READ MORE: GSM mobile operators, including Bharti Airtel, Vodafone and Idea Cellular, lost over 9 million subscribers in November 2012. At present, GSM user base stands at 663.78 million against 672.80 million users in October.
Bharti Airtel lost 2.80 million users; Vodafone and Idea Cellular lost 2.38 million users and 1.56 million users, respectively. The Maxis-owned Aircel lost 1.46 million users in November.
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