Anil Ambani-led Reliance Communications Ltd?s (RComm) failure to seal a merger deal with South African giant MTN could hamper its ambitious pan-India GSM rollout plans.
An alliance with MTN would have helped RComm build a vast GSM network, given the South African firm?s GSM operations across 21 countries. It would also have emboldened the company to negotiate from a stronger position with vendors because of its operational scale.
Telecom analysts feel the MTN fiasco, on issues related to right of first refusal (RoFR) with Reliance Industries Ltd (RIL), would severely inhibit any future M&A deal of the company.
RComm, the country?s second largest mobile operator, provides CDMA-based mobile services pan-India, while its GSM footprint is minimal with presence across eight category C circles. However, last year, under the dual technology policy, the government cleared its GSM plans and allocated it start-up 4.4 Mhz GSM spectrum in the remaining 14 circles.
The company plans to begin GSM services by the end of the fiscal, and according to some reports, is planning to build a capacity of 80-100 million lines.
A deal with MTN would have catapulted RComm ahead of Bharti Airtel Ltd, the country?s largest service provider, which currently has a subscriber base of over 69 million with a market share of 32.71%. It would also have created the world?s seventh largest telecom entity.
In the GSM space, where RComm?s wholly-owned subsidiary Reliance Telecom is present, it has up to eight million subscribers with a 3.63% marketshare, according to the latest figures from the Cellular Operators Association of India. RComm has 42 million subscribers in the CDMA segment, going by the latest figures of the Association of Unified Service Providers of India.
According to analysts, it is clear that RComm would have to venture in the GSM domain on its own as there?s hardly any scope for an acquisition in the domestic market. The process of consolidation is more or less complete in the domestic market with BK Modi-led Spice Communications being recently acquired by AV Birla Group?s Idea Cellular Ltd for over Rs 2,700 crore. Though there are new licencees available for deals, acquiring them does not make sense as they have neither a subscriber base nor networks.