The Middle East's number one mobile operator, Etisalat is looking at a new strategy for its Indian business.

A larger number of entrants in the telecom business is forcing the company to look at mergers and acquisition as an alternate way of growing its business in the country.

Mobile users are enjoying some of the lowest tariff calls. But for new entrants like Etisalat, Uninor and even MTS, these are tough times.

Most of these companies are seeing their business plans go awry and so are busy re-evaluating their plans in India.

NDTV learnt from sources that Etisalat has now started working on its Plan B for India. This involves looking to grow inorganically through mergers and acquisitions.
Etisalat has been looking at telcos like Idea and Reliance and even had preliminary talks with a few, sources said.

Interestingly Reliance Communication has a tower sharing deal already in place with Etisalat, they added.

Etisalat, which is present in 18 countries in Middle East and Africa entered the Indian market by buying 45 per cent stake in Swan Telecom for around $900 million.

Although Etisalat has about $2.7 billion of cash reserves, it may still find buying stake in Indian telcos somewhat difficult because under the existing rules a telecom company cannot own more than 10 per cent stake in another telco, if both are present in the same area.

So Etisalat that now has licence to operate in most parts of the country will either have to restrict its buy to below 10 per cent or buy out the whole company. But these rules may change soon.

It is expected that the government will soon bring about changes in merger and acquisition rules as telecom regulator TRAI will submit its new recommendations on these issues anytime now.

These new rules will relax M&A norms, paving the way for much-needed consolidation in the telecom sector.