Wednesday, July 20, 2005

Mobile consolidation

News about Essar - BPL Mobile deal has emerged today. News from different agencies have been highly confusing. Some talk of Essar buying the stakes. Some of Hutch Essar and BPL merging. Essar may be buying BPL Mobile and then eventually merge it with Hutchison Essar once necessary approvals are obtained.

This was inevitable. BPL Mobile was going nowhere. On the other hand, Hutchison Essar has been scouting for possible buys to fill up the gaps they had. The deal with Sivasankaran controlled Aircel fell through. Hutch doesn't have a footprint in Tamil Nadu (minus Chennai), Kerala and Maharashtra which BPL provides. BPL's Mumbai customers will add significantly to Hutch's base. Now that Tamil Nadu + Chennai is treated as a single mobile circle for tariffs, Hutch desperately needed a reliable partner to offer mobile roaming comparable to what Airtel, Aircel and Reliance could offer. They had a deal in place with BPL, but the deal was rather weak.

Now, when the dust settles down, Hutch can hope to grow faster in Tamil Nadu.

There are some more sick and lonely mobile companies that are waiting to be acquired. Spice in Karnataka is one. Spice in Punjab, while not sick, is still a good acquisition target for someone. Sivasankaran must now work hard to find a buyer for Aircel. Idea could emerge as a distant, fourth GSM mobile operator by swallowing these left overs.

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