M&A’s the way ahead for cell players

Neeraja Kumar in New Delhi

With the results of the second round bidding for the fourth cellular spot further crystallising the picture as to “who stands where”, the mergers and acquisitions (M&A) game in the cellular industry is all set to get hectic.

eFE took a close look at the companies that might soon come up for sale and cash rich raiders with whom they find their best fit.
Reliance seems more keen to stick to the “wireline” side of the business, so the cellular M&A scene will be driven by Hutchison-Essar, Bharti-SingTel, and BPL-Birla-AT&T-Tata.

ModiCorp’s Karnataka and Punjab operations: They will be the next on the block, say industry analysts, and both BPL-BATATA combine and Hutchison will be in race. If BPL-BATATA wins the fourth cellular spot in the Karnataka, Hutchison will acquire the Spice operations in the state and vice versa.

Bharti might also enter the fray for ModiCorp in Punjab, if it fails to get back the Evergrowth licence to operate cellular services in Punjab. If however, the government allows it to revive the licence, senior Bharti officials say that they will use it to operate services in Punjab and not give it to Essar.

Indmobile: Bharti also has the option of acquiring Dr Raj Mohan Rao promoted Indmobile, if it wins the fourth cellular spot in Punjab. Dr Rao was also the promoter of JT Mobile, which was acquired by Bharti last year.

Since Indmobile has bid only for Punjab, experts speculate that the company might just be a front for Bharti, which officially can not bid for Punjab because of Evergrowth.

BPL, Maharashtra: Maharashtra operations of BPL are also on the block. Here again, the suitors are Bharti and Hutchison. Depending on which one wins the fourth cellular spot in the circle, the other will buy Maharashtra from BPL.

Escotel: Contrary to expectations, Escorts Communications bid aggressively for the fourth cellular licence in Delhi and five states in the North West.

However, analysts predict that, “if Escorts does not win these, it will be looking for a buyer straight away. But if it gets Delhi and Punjab, then Escorts will be a North-centric player and sell out after increasing its valuations.”

UP circles of Koshika: UP (east) operations of Koshika might be of interest to both Escotel and Bharti, depending on which one of the two fails the secure the fourth cellular licence in the circle. UP (west) might be picked up by Hutchison-Essar, which already has UP (east) with Aircel Digilink.

Rajasthan operations of Hexacom: Since Hutchison Essar is already present in the circle through Aircel Digilink and BPL-BATATA till now has not envisaged much interest in the circle, the choice of the suitors for Hexacom narrow down to Escotel and Bharti, depending on which one fails to get the fouth cellular licence.

But even as “everyone is talking to everyone else”, as Mr Rajeev Chandrashekhar, chairman BPL Communications says, mergers are not just about mapping the best fit. “What will come in way of consolidation is ego,”he says Well, that sure didn’t stop BPL-BATATA from happening.