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Journalism of Courage
The Hutch-Essar deal to take over BPL Mobile is expected to change the dynamics of the Rs 31,300 crore-Indian cellular phone industry and will set the ball rolling on the eventual consolidation of the other non-national cellular operators.
Once merged, Hutch Essar will become a strong competitor to the two large cellular operations of Reliance and Airtel and the largest pure play GSM operator in the country with a combined subscriber base of over 11 million across 21 circles. With the industry adding 2 crore new customers per annum, mergers and acquisitions is the most favoured route to expand the footprint.
‘‘The proposed combine of Hutch Essar and BPL Mobile will create a national footprint and will emerge as a strong force alongside Airtel and Reliance,’’ said Nimesh Kampani, Chairman of J.M. Morgan Stanley.
Reliance, BSNL and Airtel will however continue to play an important role with all the three companies planning significant investments. ‘‘There will not be any changes in industry rankings but the deal will certainly give Hutch-Essar a good grip over the metros like Mumbai and Delhi,’’ said Gurunath Mudlapur, head of research at Khandwala Securities.
BSNL is planning to add 24 million wireless lines and six million wireless capacity in FY06. The current capacity additions are the largest ever envisaged by BSNL. ‘‘With this background, BPL had no other option but to look at bigger players for a merger,’’ said a telecom analyst.
According to COAI, as on June 2005, Hutch has a market share of 18.79 per cent and is the third largest player in the GSM segment. Bharti is the number one player with a market share of 27.28 per cent, followed by the public sector player BSNL, which currently has a market share of 22.77 per cent. BPL has a share of 5.85 per cent. The combined Hutchinson Essar — BPL will now have a market share of 24.64 per cent, making it the second largest player in the GSM segment today.
With this acquisition, Hutch will now have a subscriber base of 11.06 million, followed by BSNL at 10.23 million. Bharti has a subscriber base of 12.25 million, according to COAI’s June figures.
The BPL deal also means that smaller regional players will have no other option but to merge with big players.
Rajiv Chandrasekhar to remain a telecom player
MUMBAI: Hours after inking a deal with Essar group, Rajiv Chandrasekhar, Chairman and CEO of BPL Mobile said he will continue to remain a player in the Indian telecom industry. ‘‘There is an agreement of sorts that I will not remain a player in the cellular phone industry but I am evaluating my options to invest in the telecom industry.’’ Chandrasekhar told The Indian Express.
Chandrasekhar steered the group’s investments in the cellular phone industry. In the last 10 years though BPL group’s cellular phone business flourished and was getting better valuations in spite of BPL Mobile making losses, BPL’s traditional business of consumer electronics — led by Nambiar’s son — fell into bad times. This even led to a public fracas between Nambiar and Chandrasekhar which was settled out-of-court last week.
