Tata Teleservices could be acquired by Airtel as India heads towards four-operator market
June, 28th 2017
The Indian telecom market could be moving towards a four-operator market over the next three years, according to a report by CCS Insight. The report titled ‘Halcyon days ahead in a four-operator market’ elaborates on how the telecom industry in India is struggling right now with huge debts. CCS Insight points out how the consolidation process in the telecom sector is increasing and possible mergers and acquisitions that could take place.
The CCS Insight report has responses from a survey conducted among telecom executives. It found that 68 percent of the telecom executives believe that the telecom market will indeed “consolidate to just four operators over the next three years”. In terms of consolidation process, it began last year with Reliance Communications announcing its merger with Aircel. This year saw Airtel’s announcement of acquiring Telenor in February. This was followed by the ongoing merger deal between Vodafone and Idea Cellular which would result to the making of India’s biggest telecom operator.
The report cites how “consolidation is bringing to an end almost two decades of market chaos”. It also states the current scenario where new entrant Reliance Jio is garnering huge profit, thereby bringing more trouble to the loss-making telcos. In addition to this, experts put possible scenarios of how this consolidation process would take place in terms of mergers and acquisitions. Apart from the three consolidations in process, the telecom executives highlight three possible options for Tata Teleservices to remain in the telecom industry. First, is a possible acquisition by Airtel, the second is a merger with Reliance Comunications-Aircel and lastly a merger with BSNL. ALSO READ: Reliance Jio free offering led to 11.7% fall in industry revenues: Report
The survey found that 47 percent suggested that the best option would be for Tata Teleservices being subsumed by Airtel. This would mean a complete acquisition of Tata Teleservices and not just a merger. The other possible alternative was a merger with state-run BSNL leading to privatization for the latter. In other news, BSNL is likely to merge with MTNL. Tata Teleservices is currently in a bad state with decreasing subscribers and shareholder disputes. ALSO READ: Telcos meet Manoj Sinha to discuss stressed health of telecom sector
The survey highlights how the telecom industry after consolidation will be in 2020. It predicts that India will have four major telecom operators out of which three are private and one is state-owned. The three private telcos will have over 300 million subscribers and possible state-owned BSNL will have over 100 million. It also predicts that there would be a presence of mobile virtual network operators and small local players but they would hold less than 0.5 percent share in the market. The consolidated market would look something like Vodafone-Idea Cellular, Airtel, Reliance Communications- Aircel merger and a possible merger with Jio as well, and a state-owned entity with the combined BSNL and MTNL. Tata Teleservices would have likely merged with or acquired by one of these