Stuck with a meagre 2.5 MHz of spectrum, Indo-Russian telecom operator MTS-India -- a joint venture between Shyam Telecom and Sistema JSFC -- is awaiting the new government policy on mergers and acquisitions (M&A) to expand its operations in India.
"We are waiting for the new M&A policy because we do believe that the Indian market should be consolidated. We want to participate in this consolidation," Sistema JSFC CEO Mikhail Shamolin told a group of visiting journalists here.
Sistema holds the majority stake in the JV.
At the same time, Shamolin said MTS India was keen on having an additional 2.5 MHz of spectrum, as it has fulfilled its contractual obligations and has the required number of subscribers, making the company eligible for additional bandwidth.
"We have an agreement with the government which says that we get 2.5 MHz spectrum and if we fulfill our obligations, we get another 2.5 MHz at the price we have paid initially," he said.
However, he said 5 MHz (2.5 MHz+2.5 MHz) was not a good quantity of spectrum to provide quality telecom services and pointed out that the global standard was 20 MHz.
"Five MHz is too thin and too little," he said, indicating that the group was waiting for the M&A policy to improve the situation.
"We are interested in consolidation. In which form exactly and in what kind of combination remains to be seen. Definitely, we want to be one of the players. We do not want to exit the market given how much we have invested there and how important it is for business of MTS and Sistema," Shamolin said.
Asked about expectations from the government, he said India needs to take particular steps to promote foreign investment and tell businesses in clear terms of the policy developments for at least the next five years.
There are 13-14 operators in each circle, making it difficult to remain competitive and profitable at the same time. Due to this, mobile tariffs in India are the lowest in the world.
Consolidation has to take place and according to experts, 5-6 players would be an ideal situation.
This, however, would depend on the M&A norms likely to be announced soon by the Department of Telecom (DoT) as part of the National Telecom Policy (NTP)-2011.
