French media and telecoms company Vivendi is holding a series of talks with Datacom Solutions, which holds an Indian mobile licence, about acquiring a majority stake in the company.
While Datacom, owned by the Videocon group, has yet to start building a mobile network, observers claim it is better positioned than other new entrants mainly because of Videocon's distribution reach and cross-selling opportunities. Datacom was recently estimated to have a market valuation between US$1.6 billion and US$1.8 billion and has been the subject of other abandoned merger discussions with UAE's Etisalat and Turkish telco Turkcell.
While the Indian cellphone market has become intensely price competitive following the launch of multiple operators, industry analysts are strongly predicting that consolidation now looks inevitable. According to Alok Shende, principal analyst at Ascentius Consulting, the downward pressure on mobile pricing is easing and the restrictions around mergers & acquisitions could become less severe. "In such a scenario, it is the opportune period for international players to enter the Indian market."
Meanwhile SFR, Vivendi's French mobile subsidiary, said that it was interested in the possibility of bidding for additional 3G frequencies, which will be auctioned in France during the first half of this year. "If we still need more spectrum, we will look at it," said CEO, Frank Esser.
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