Curbs to consolidation

Robert Clark
21 Jun 2010
00:00
News
Features

If India's operators had hoped new rules would allow the over-supplied market to consolidate and provide access to fresh spectrum, they must be sorely disappointed.

The current M&A rules forbid cellcos from buying more than a 10% in another company operating in the same circle - effectively ruling out any consolidation at all.

But under the TRAI's new scheme, announced last month, mergers will be limited to operators whose combined customer base is no more than 30% of a single circle.

It is an advance from the current rules, but means mergers between the larger operators will not take place. Rather, it lends itself to big players merging with small operators, such as fledgling GSM1800 operators.

The problem is that the GSM1800 start-ups don't bring anything to the table - few subscribers, large debt and no 3G spectrum.

The big players are not so interested in more 2G spectrum - what they really seek is more 3G spectrum to fill out network gaps.

me to"The M&A picture is more fragmented than before," said Ovum's Shiv Putcha. He believes that the GSM1800 operators may look to exit in the next two years, but if they are going to catch the eyes of the big incumbents, it follows that they will need some 3G.

The next 3G auction is probably some three to four years away.

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