Will M&A policy act as a booster to Indian telecom

India plans to finalize Mergers & Acquisition (M&A) policy in the coming week says telecom minister Kapil Sibal.

Recently, the Telecom Commission has given a go ahead to mergers and acquisitions whereby merged entity may hold up to 50 percent market share in each circle. The cap has increased from 35 percent to 50 percent, leading to market consolidation in days to come.

After the Telecom Commission has given its decision, the Union Cabinet needs to ratify the Telecom Commission’s decision of operators holding upto 50 percent market share.

With the announcement of M&A policy in the coming week, the Indian mobile market will see a lot of activity. One will see entry of new international operators in the Indian market. Even existing players will get merged if the policies are favorable. There is a strong expectation that M&A policy will be industry friendly as it will help in giving a new life to the telecom sector.

One will see lot of activity in operators like: Reliance Communications, Aircel, Tata DOCOMO and Loop Telecom. Operators worlwide are eyeing these operators for making their India stratgy plans. It is also expected that Vodafone will increase its stake in the Indian subsidiary as it will help them once they plan their India IPO in 2014.

It is good to know that the Telecom Commission has also given its go ahead for spectrum trading and this will also help operators to exit from telecom if they are not successful through M&A route. It is too early to predict about spectrum trading as the rules of the game are yet to be finalized by TRAI.

The Indian mobile market will see a lot of consolidation and the number of players will reduce significantly thereby leading to more investment in the sector in 2014.

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