Consolidation to pick up when spectrum, M&A rules in place

Tags: News
Vodafone, the nation's second-biggest mobile service provider by users, today said consolidation in the telecom sector will pick up when rules for spectrum trading and sharing and for mergers and acquisitions are put in place together.

"It needs to happen...Sharing spectrum, trading and we now have the new M&A policy. If these three things come together then you will see more of a movement," Vodafone India Managing Director and Chief Executive Officer Marten Pieters said at the Mobile World Congress here.

The government said telecom companies can merge provided their combined user numbers and adjusted gross revenue from telecom services do not exceed 50 per cent of the market.

The Telecom Regulatory Authority of India has sent its recommendations on spectrum trading to the Department of Telecom and is considering norms for sharing spectrum.

Pieters said companies will go where they can make returns as there are too many assets with firms that are not being used.

"They are sitting on it (assets) and that is actually bad news for both the industry but also for these companies. They don't generate any return," he said.

Asked if Vodafone would be interested in Tata Teleservices or any other company, Pieters said Vodafone needs more spectrum.

"What we need is more spectrum, that's what we have said over and over again. So I don't have 3G in many circles. LTE we bought now but need more over time and actually there are some other assets that are difficult to acquire in India, like building fibre in metro cities...So all these kind of assets do have a value," he said.

The Vodafone India chief said consolidation has already started with Bharti Airtel's acquisition of Loop Mobile.

Bharti Airtel, Vodafone, Idea Cellular and Reliance Jio Infocomm were the biggest buyers of spectrum in an auction earlier this month. Eight companies bid for airwaves in the 900 MHz and 1800 MHz bands during the 10-day sale that fetched the government a combined Rs 61,162 crore of bids.

"What you saw in the last auction, only guys that have really deep pockets, strong balance sheets and the guts to go for a long-term view can be there and there are a few that can afford that, all the rest bought virtually no spectrum," Pieters said.

Rating agency Fitch has said that in the long run, India can support five or six profitable telecom operators. There are currently about a dozen players in the country, with many of them making losses.

EDITORIAL OF THE DAY

  • Saffronites need to build their own edifices and narratives

    The news that the BJP-led NDA government, no admirers of India’s first prime minister, want to give a ‘contemporary’ look to the capital’s mos

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

Sarthak Raychaudhuri

vice-president, HR, Asia South Whirlpool of India

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

TODAY'S COLUMNS

Sachin Shridhar

Crouching tiger, hidden dragon

The Chinese are consummate gamblers. If you visit a casino ...

Zehra Naqvi

Capturing change

The pace of change in the world around us can ...

Gautam Gupta

Bring on the Benares brigade

It was in 2003 when I first started work and ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture