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Buyout of BPL by Essar has brought the first phase of consolidation in India’s cellular sector, a step to completion.
It has also shown that M&As have happened among Indian Companies themselves, and major global players like Vodafone, DoCoMo, STT-Telekom Malaysia that have been eyeing the telecom market here through small, stand-firms, have been left out for the time being.
For long, companies that operated only in 2-4 telecom circles have tried to hold on their own against the overtures of GSM biggies like Bharti’s Airtel and Hutch Essar’s Hutch.
Some years ago, BPL, Spice, Escotel and Aircel – formed an alliance Mobile-First, with outside support from Idea to woo a global partner and give tough competition to Airtel and Hutch.
That didn’t happen Idea bought over Escotel, but failed to get STT-Telekom Malaysia combine as its foreign partner. It was believed to be eyeing BPL and Spice. For now, its future plan is a question mark.
BPL remained in a mess for long because of infighting of partners, and its move to merge with Idea failed. Now it has gone to Essar’s pocket, perhaps, eventually to merge with Hutchison-Essar before its IPO happens.
Aircel, which operates in Tamil Nadu and Chennai saw its Rs 1,800 crore deal with Hutch fall through. Last it was heard trying to do a deal with some Russian operator. In the meanwhile, Essar group (independent of its Hutchison-Essar JV) lined up $1.5 billion telecom plan to buy BPL and Spice. Despite Spice promoters’ protestations of Essar’s moves. It’s a matter of time before company goes into the fold of the two big GSM players.
That a foreign company will find any one of the three small(er) players – Aircel, Idea and Spice – as an attractive buy, seems difficult. It won’t bring global level scales and numbers.
One thing has been clear for years, Small operators have not been able to hold on their own. Interestingly, if Essar and Hutchison-Essar are successfully able to integrate their operations. It could be competition to Airtel, which continues to be the largest GSM operator , with over 12 million subscribers.
And as Phase-I of consolidation nears an end, talks of the second round of M&As have begun. If government allows 74% FDI, the global players like VodaFone, Deutsvhe Telecom, France Telecom, NTT DoCoMo are expected to enter India.
That would be the big time game, with big numbers and realty big money to catapult India’s cellular industry on to the world stage.
