Airtel may acquire Tata Teleservices to maintain leadership in revenue market share

Sunil Mittal-led Bharti Airtel is likely to acquire Tata Teleservices, which is seen as an alternative to Tata Tele merging with state-owned BSNL.

As per a report by London-based CCS Insight, a global mobile and wireless market information and intelligence provider, the Indian telecom sector will consolidate into a four-operator market in coming three years.

The report, 'Halcyon Days Ahead in a Four-Operator Market', was published after a survey with 57 telecom M&A influencers.

As per the survey, 68% of the experts nodded to a four-operator market would prevail by 2020.

"The only reason for Airtel to consider a deal with the Tatas will be to maintain leadership in revenue market share. The deal between Vodafone and Idea threatens to take Airtel's leadership here, and thus Sunil Mittal may counter this through such deals if they come at an attractive price," a top industry analyst told ET, requesting anonymity.

As per the report, Tata Tele is likely to be subsumed by Bharti Airtel, 22% said a deal with BSNL was possible and 32% said it could merge with another network operator.

"From structuring and approval perspectives, the easiest transaction would be for Tata Teleservices to be subsumed by Bharti Airtel. Our view is that the main alternative is a tie-up with BSNL, but other combinations exist, such as a complex merger with the Reliance Communications-Aircel business," said the report authored by Tony Worthington, a former Standard Chartered and ABN AMRO banker, who has been involved with Indian telecom industry since 1995.