Global Players Increasing Interest in India
By CXOtoday Staff
Mumbai, Nov 13, 2008 1758 hrs IST

The Indian mobile telecom market has become a high potential zone for global service providers. A market that adds more than nine million subscribers per month and where mobile services revenues are projected to cross $37 billion by 2012, growing at a CAGR of 18%, is indeed an attractive proposition. However, it does seem that global players are seriously considering entering the Indian market.

The recent decision of NTT DoCoMo, Japan s largest mobile telecommunication service provider, to pick up 26% stake in Tata TeleRservices, for $2.7 billion exposes the entry potential for global mobile telecom service providers who do not have on their radar an India entry strategy yet.

Other noteworthy investments made recently include a $1.36 billion investment in Unitech Telecom by Norwegian telecom firm -- Telenor, and Dubai-based Emirates Telecommunications Corp s (Etisalat) $900 million investment in Swan Telecom, a start-up GSM telecom service company. South Africa s largest telecom company -- MTN Group is also attempting to foray into the Indian market. According to advisory firm IndusView Advisors, these are indications that there is ample room to enter this market, at least inorganically.

The investments in Tata Teleservices by NTT DoCoMo and the start-up operations of Swan Telecom by Etisalat and Telenor ASA s in Unitech Telecom exposes the potential for inorganic activity in a market that is otherwise considered to be crowded but has a tele-density of less than 30%, signifying the expected growth potential in the sector. said Bundeep Singh Rangar, chairman of IndusView Advisors Ltd.

Other international telecom service providers seeking an India entry include Kuwait-based Zain Group, Qatar Telecom, Bahrain Telecom, Italy-based Telecom Italia SpA, etc. Some major names missing from this list are Telefonica SA of Spain, French mobile telecommunication services provider, France Telecom and Deutsche Telekom AG of Germany. Surprising, considering that experts project the mobile subscriber base in India to reach more than 700 million by 2012 from the current 300 million, at a CAGR of 21%.

Such growth trends bring with it corresponding increase in investments as government estimates suggest that the overall telecommunication sector will need $73 billion over the next five years to achieve a tele-density of up to 45%. And, a major chunk of the investment is expected to be realized through Foreign Direct Investment (FDI), particularly in the area of mobile communication.

It becomes significant as the government has granted new licenses and spectrum to aspiring operators such as Datacom Solutions, a subsidiary of Videocon; Loop Telecom, a BPL Mobile Communications group company; S Tel Ltd, joint venture between Skycity Foundations and Telecom Investments (Mauritius) Ltd; among others which are likely targets but within the regulatory purview of the overseas entity s stake in the domestic company not to exceed 74%.

MTN Group, South Africa s largest mobile service provider with operations in 21 countries is another service provider waiting in the pit-lane to move in to India after its attempts to do so failed on two earlier occasions with leading Indian telecom service providers Bharti Airtel Ltd on the first count, followed by Reliance Communication, which could have been the largest telecom merger in emerging markets worth more than $65 billion. said Rangar

Taking a collective view of the inorganic growth activity in the technology driven businesses, IT, ITeS, and telecommunication together account for deals worth about $6 billion, crossing the three digit mark of 100 deals with 21% share in M&As worth $28 billion to October this year.


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