Regulatory changes could see Indian market leader acquiring local rivals

The Indian government is reviewing its stance on mergers and acquisitions as a means of fostering consolidation in the highly competitive market – and this may lead to the market leader Bharti Airtel acquiring domestic operators.

The operator’s CEO Sanjay Kapoor said in an interview: “Bharti as a company has grown both through organic and inorganic forms of growth. So we are not averse to acquisition, but every acquisition has to be evaluated on its merits.”

He added: “Given our position in the market, and given the fact that we have a 30 percent market share even in a very crowded market, we see that any move towards acquisition will purely be dependent on what’s on the table. Right now there’s nothing on the table.”

Consolidation between the fifteen competing operators in India is currently stymied by legislation, and this has driven prices down to under US$0.01 per minute. The current law states that at least four private operators must be present in each of India’s 22 telecom circles, but that no merged entity may have a market share of over 40%.

These are far from the only restrictions: operators can hold only a limited amount of spectrum per circle, and cannot hold a stake of over 10% in another operator if they are present in the same circle. In addition, there is a three-year period after receiving a licence during which operators are forbidden from selling a stake.

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