According to a report published by a London-based mobile and wireless market information and intelligence provider, Bharti Airtel will most likely to acquire the struggling Tata Teleservices as the Indian telecom sector consolidates into a four-operator market in the coming three years. Published after a survey with 57 telecom M&A influencers, the 'Halcyon Days Ahead in a FourOperator Market' report also provides details of an “intriguing” alternative in Tata Tele merging with state-run BSNL.
About 68 per cent of the experts thought a four-operator market would prevail by 2020, the survey said. The scenario will have three private providers each with over 300 million subscribers and one state-owned operator with over 100 million. The report comes amid speculations about Bharti Airtel accelerating bolt-on acquisition talks after a merger-in progress between Vodafone and Idea Cellular dislodged it from the top slot in the Indian market. However, several analysts argued there is “little business sense” for Airtel to buy the loss-making Tata Tele.
“The only reason for Airtel to consider a deal with the Tatas will be to maintain leadership in revenue market share. The deal between Vodafone and Idea threatens to take Airtel's leadership here, and thus Sunil Mittal may counter this through such deals if they come at an attractive price,” a top industry analyst said.
Tata Tele has revenues of around £950 million, but these as well as subscribers are fast depleting. On top of this, the annual payout towards debt servicing is around £250 million on total outstanding borrowings of nearly £3 billion. Almost half of the respondents in CCS survey said Tata Tele is likely to be subsumed by Bharti Airtel, 22% said a deal with BSNL was possible and 32% said it could merge with another network operator.
