7 billion for a 26 stake in tata teleservices52

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Unformatted text preview: lobal liquidity crunch is likely to take a toll in the short-term mergers, the interest shown by global Telecom operators in the domestic Indian Telecom market has been encouraging. Recently, Japan’s leading Telecom operator, NTT DoCoMo invested USD2.7 billion for a 26% stake in Tata Teleservices.52 Norway-based Telecom company Telenor acquired a 60% stake over USD1 billion in Unitech Wireless in India, which has a nation-wide 2G mobile license.53 And UAE-based Etisalat has invested USD900 million for a 45% stake in Mumbai-based Swan Telecom, which has licenses for 13 Telecom circles.54 This will help channelize investment in 2G, and in some cases, even 3G services. This is also the time for leading Indian Telecom operators “to shop” for assets abroad. It is an opportunity to build a truly global presence. A few of these players have already announced that they are looking at global expansion. The impact on the investments made by foreign operators in Indian Telecom companies is likely to be muted as leading Indian Telecom operators are mildy leveraged. Network expansion is expected to continue during 2009 and 2010 to meet the rising demand for wireless connectivity. “Auction of 3G spectrum in 2009”55 will be a principal arbiter to judge the resilience of the Telecom sector. The global financial outlook may be a deterrent for international operators to participate in the auctions. However, the Government may modify auction guidelines by allowing successful bidders to make payments on a staggered basis — to pay the reserve price upfront and pay the remainder cost in easy instalments. This should make it attractive for international operators to enter India’s Telecom market. However, beyond the spectrum, operators will adopt a conservative stance on spending for the launch of 3G services. It will take time for 3G to gain traction in the market. Besides, the immediate focus of the 3G bid winners will be providing data services in the top 20 cities. Despite the global slowdown, the de...
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This document was uploaded on 03/03/2014.

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