M&As add colour even as telcos bicker over spectrum

Written by Vrishti Beniwal | New Delhi, Dec 24 | Updated: Dec 25 2007, 07:02am hrs
It wont be an overstatement to describe the year 2007 as the the year of telecom, with the sector witnessing one of the biggest merger and acquisition as well as the beginning of a big controversy. If the beginning of the year saw Hutchs stake sale to Vodafone at a mouth-watering $11 billion, the second half saw telecom companies making headlines, thanks to the never-ending spectrum allocation war with the corporate honchos and every wing of the government adding flavour to the topsy-turvy telecom story.

With no solution to the spectrum issue yet, 2008 looks equally exciting, if not more. Despite the uncertainty over spectrum and other regulatory issues, the sector is likely to add 7-8 million subscribers a month in the future also.

According to industry analysts, in order to get a clear picture, the spectrum issue needs to get sorted out first before things move further. The entire policy needs to be looked at again, rather than addressing the issues in the piecemeal fashion. For instance, there is no clarity on which ministry is going to be the nodal body for mobile TV.

The huge potential in the Indian telecom market will surely attract some foreign players to the country. However, it remains to be seen in what form they come to India. Besides number portability, we may also see implementation of carrier access code and active infrastructure sharing in 2008, said Usha Rajeev, leader, telecom practice, PwC.

Bharti Airtel has so far been the leader in the domestic telecom market, but the tables might turn if its rivals manage to win the battle over spectrum. Competition is set to get stiffer, as CDMA operators Tata Teleservices and Reliance Communications will also start their GSM operations.

Bharti Airtel, Vodafone Essar and Idea Cellular formed an independent tower company for tower sharing among operators. The sharing of passive infrastructure will increase as RCom may also share its towers with other operators. The average revenue per user will also go down further, as it happened in 2007.

The year also saw global majors like Ericsson, Nokia Siemens and IBM clinching billion-dollar deals from the Indian telecom companies. BSNLs GSM tender would be floated again after it hit innumerable roadblocks during the year.

The tender was cut to half after telecom minister A Raja, who took over from Dayanidhi Maran, found it overpriced. Though L1 bidder Ericsson accepted the order at the revised price, second lowest bidder Nokia Siemens did not accept it.

While the country set several milestones in the passing year (roaming tariffs halved, teledensity crossed 20% mark, target of 250 million telecom subscribers met before stipulated deadline), the next growth story in telecom will be scripted in the rural areas.