In the backdrop of several domestic players making a beeline for the mobile phone segment, Standard Chartered Bank has said many international investors are looking for investment opportunities in the segment, where the number of subscribers is slated to double to 600 million in the next five years.
?We see a penetration rate of over 50% in the telecom sector,? said Tony Worthington, managing director of Standard Chartered Bank?s telecom, media and technology (TMT) division.
The bank, which has mandates from Middle East-based investors seeking investment in the sector, believes five key drivers are causing the sustained growth in mobile subscribers in the country. ?We have seen high level of enthusiasm among the Middle East investors for foraying into the Indian telecom sector. The five factors that have led to continued growth are affordability, innovation, brand, competition and positive consolidation,?? said Worthington.
?We believe positive (as opposed to distressed) M&As will continue and the market can support 10 profitable mobile operators. Further consolidation is likely over the medium term, leading to greater scale and benefits for new subscribers,? added
Worthington. The sector is providing an attractive valuation to existing players and some would like their valuation to touch a high before they decide to offload stakes in favour of other investors.
?We are currently discussing with our clients their medium term growth forecasts,? he revealed, adding that $1000 per customer (as against $750 offered by Vodafone to buy stake in Hutch) would be a good price to offload stakes. The bank has seen valuation levels of $1500 per subscriber in certain Middle East markets.
According to Worthington all circles now have several viable, highly competitive service providers.