Etisalat refocuses on Idea Cellular as Indian target
Emphasis shifts in India as Idea Cellular hits rich vein of form, acquires customers faster than Reliance
Published: 7 September, 2010
READ MORE: M&A | Asia | India | Idea Cellular | Reliance Telecom | Etisalat | UMTS
Emirates Telecom (Etisalat) is one of the richer overseas operators which is known to be chasing expansion now that India allows investment in its new 3G entities. This week its senior executives steered thinking away from any partnership with Reliance Communications, the only 3G operator without a major international stakeholder, and pointed it instead at a deal to acquire a major stake in second tier player Idea Cellular alongside existing investor there, Malaysia's Axiata Group.
The idea came out of an interview between Bloomberg and Jamal Al-Jarwan, CEO for international investments at Etisalat.
The UAE based Etisalat was one of three or four players thought to be in the running for a 25% stake in India's Reliance Communications along with other rivals such as AT&T or South Africa's MTN. Vodafone's Essar operation in India has gone on record saying that there needs to be a series of mergers or joint ventures as smaller rivals fail, despite India's mobile population growing faster in percentage terms than every territory in the world including China. The problem in India is the rising debt of its cellular players.
Etisalat itself has struggled to become a genuine player in India, despite its chairman publicly saying in June that this is its intent.
Etisalat so far holds its own license through Etisalat DB Telecom Pvt, a venture with India's DB Group which has operated under the brand of Cheers Mobile since 2008, but has only attracted a handful of customers, 20,000 as of June, according to data from India's telecommunications regulator. Given that the Indian market has already reached 636 million wireless subscribers, that's got to be considered a very slow start.
In the past Etisalat has openly talked about acquiring a stake in Reliance Communications, but has now gone quiet on this subject as it has become clear that Idea holds less debt and is acquiring customers at a nice clip, faster than Reliance.
Idea Cellular needs to spend around $500 million to build out its new 3G network and is expected to place orders with its existing vendors including Nokia-Siemens Networks, Ericsson , Huawei and ZTE for 3G rollouts in 11 circles. Many of the major Indian networks struggle under huge debt burdens and the 3G build out was opened up to allow foreign investment, purely to mitigate these debt mountains with foreign cash.
Idea Cellular currently has 69 million subscribers, or around 10% of the market and it already has Malaysia's Axiata Group with a 19% stake in the business.
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