Indian consolidation could be hamstrung by M&A rules

Although it is widely believed that consolidation would be beneficial to India’s overly competitive market, the country’s new mergers & acquisition rules could limit the amount of consolidation permitted.

The current proposed measures limit the amount of spectrum that operators can acquire through investing in rival firms. In addition, operators would be obliged to ‘reacquire’ spectrum obtained through mergers at the full market price.

The new rules were widely anticipated to encourage mergers, with India’s eight major players expected to consolidate into four or five. However, having the reacquire spectrum could be a significant deterrent for major operators that were previously considering acquiring smaller players.

Several of the larger operators in the market are believed to be considering mergers. Among these are Aircel, Sistema, Tata Teleservices and Telenor, the latter of which has ruled out any M&A activity before the new regulation has been clarified.

Bharti Airtel shareholder SingTel has expressed its hope that the Indian firm will play a part in India’s “desperately need[ed] consolidation”, while Vodafone CEO Martin Pieters has described his firm as a “natural consolidator” in the market.


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