Telecom Market Ripe For Consolidation

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Vodafone India is bullish on the telecom sector’s prospects with consolidation imminent as many of the players are making losses and thus may not have too many options but to sell out.

“There are currently about a dozen players, with many of them making losses,” Marten Pieters, Vodafone India managing director and chief executive, told ET.

Pieters, however, declined to specify if Vodafone India will play a role in the industry consolidation though he has previously said that India’s second largest mobile phone operator is a “natural consolidator”. Vodafone has been reported to have been in talks to acquire Tata Teleservices.

Pieters said that the recently announced M&A rules, along with the expected guidelines on spectrum trading and sharing will facilitate consolidation in the debt ridden sector going forward.

While the DoT needs to clear trading rules suggested by the sector regulator in late January, the department is still working on the sharing guidelines. Both are expected to be unveiled after the ongoing general elections.

On the M&A rules, Pieters backed the move to raise the subscriber and revenue market share limit of a merged entity to 50% from 35% and the one year time frame allowed to fall in line with that rule, saying it offered “more flexibility”.

He, however, said that the 25% cap on airwaves held by a merged entity might be an issue. A merged entity can have at the most 25% of total airwaves assigned for access services and 50% of the bandwidth assigned in a given band, by way of auction or otherwise, in the concerned service area.

India’s telecom industry has been facing years of eroding revenue and profits thanks to cutthroat competition.

Carriers, however, say that the worst is over as competition is easing gradually and data is likely to drive future growth. They expect consolidation to further improve business conditions, though the entry of Reliance Jio Infocomm, likely later this year, could queer the pitch. Original Post at The Economic Times

Wahengbam Rorrkychand

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