What should be the limit on market share after M & A in Telecom space ?

TRAI's consultation paper on licensing norms review has attracted following views from major Indian Telcos :


State-owned BSNL has suggested lowering of the market share limit to 40 per cent from the current 67 per cent following the merger and acquisitions of two entities in the telecom sector to avoid monopolistic situation. "It is felt that the existing provision of 67 per cent market share will create non-competitive or monopolistic situation. It is, therefore, suggested that this limit should be brought down to about 40 per cent"


Vodafone Essar, which has recently acquired number two slot in terms of subscriber base, said "We are of the opinion that the 67 per cent limit is appropriate when applied to a narrow mobile market definition. "But regime of the current M&A Guidelines, not a single intra-circle merger between licensees has taken place to date and it cannot be said that the current guidelines have produced an environment of undue consolidation. The guidelines, therefore, remain appropriate."


CDMA player Tata Teleservices wants this cap to be at 45 per cent. "We recommend a maximum market share of 45 per cent for the merged entity," the company said. The PSU also wants fixing a maximum spectrum limit that would be held by a merged entity be. It also does not want any merger to be allowed between a CDMA and a GSM company. Vodafone Essar said the merged entity should have a spectrum limit.

GSM players in India add 5.4 m subscribers in June 07

GSM players in India added 5.4 million new subscribers in June. the public sector BSNL has registered negative growth in five of the 21 telecom circles where it offers services. Overall, the PSU has added just 4.3 lakh new subscribers in June compared to 1.96 million by Bharti Airtel and 1.54 million by Vodafone-Essar. This also implies that the PSU, which had lost its position as the second largest GSM player in the country to Vodafone Essar in May 2007, has slipped further down. Vodafone Essar now has a total of over 30.75 million subscribers and a market share of 22.61% when compared to 28.42 million and 20.90% for the PSU.



As per the latest data compiled by the Cellular Operators Association of India (COAI), the industry association representing all GSM operators, the GSM subscriber base has touched 136 million as of June end, 2007, up 4.12% when compared to 130.1 million in May 2007. The growth witnessed in June was lead by Bharti Airtel, which added just under two million new users taking its subscriber base to 42.7 million. Bharti now commands a market share of 31.40% in the GSM space. Reliance Telecom, the GSM arm of Reliance Communications has also performed poorly — the company, which has 4.34 million subscribers, has failed to show even a single new addition in all the eight circles it operates. BSNL’s subscriber additions over the last couple of months have been thrown off target as the company has exhausted its capacity in most key circles. The PSU has not undertaken any major expansion contract since October 2005.



This has witnessed even regional players like Idea Cellular which has operations in just 11 circles and Aircel Cellular which has operations in 9 circles overtaking the PSU in terms of subscriber addition over the last couple of months. While BSNL has issued tenders for the supply of over 45 million lines in March 2006, it was so far been unable to place orders for the network equipment. In fact, Idea has added about 0.9 million subscribers last month, which is twice that of BSNL. Last month, among all circles, Category B circles witnessed the highest rate of growth at nearly 5.0%. Within the Category B circles, the highest growth was recorded by the UP (West) Circle at (6.5%) closely followed by West Bengal and Andaman & Nicobar Circle at (6.1%).