The Indian Department of Telecommunications (DoT) may allow some of India’s new mobile operators to sell their licences and airwaves, according to an official cited by the Economic Times. Such a move is likely to thin out India’s crowded mobile phone…
The Indian Department of Telecommunications (DoT) may allow some of India’s new mobile operators to sell their licences and airwaves, according to an official cited by the Economic Times. Such a move is likely to thin out India’s crowded mobile phone market, currently populated by 14 operators, many of them foreign owned.
He confirmed that ‘exit options’ were being discussed after some unspecified new entrants approached the DoT seeking a refund of their Rs. 16.51bn (US$351m) entry fee in return for surrendering their licences and bandwidth to the government, wrote the newspaper.
The DoT official went on to explain that these telcos want to exit their licences and spectrum in select service areas due to constraints in launching mobile operations across India’s 22 circles.
The exit options being considered include allowing new entrants to merge with larger companies, shortening the three-year period during which a founder of a telco cannot sell out, and relaxing rules to allow incumbents to retain bandwidth held by these new companies in case of a buyout or a merger.
Earlier this year, the telecom regulator issued a new set of M&A guidelines, criticised by some large Indian telcos as standing in the way of consolidation. According to the Financial Express citing official sources, these companies are also lobbying hard for the DoT to relax its M&A guidelines.
India’s mobile market is vastly overheated, with telecoms experts suggesting that it must be reduced by at least half if anyone is to make a profit. Locally owned operators such as Bharti, Tata, Idea and Reliance, and state owned groups BSNL and MTNL are likely to be among the survivors. According to one telecoms lawyer, “Overseas operators made the mistake of applying their own business models in India, and this is not sustainable in the longer term”.
According to TRAI figures cited in the report, new entrants Uninor, STel, Loop, Etisalat, Videocon and Sistema had among them added less than 12% of the country’s newest 18 million customer in June 2010.
