As per market reports, an undisclosed Mexican company and an Indian Telecom player have shown interest in buying 49% stake of Videocon Telecom, the telecom arm of Videocon group. It is expected that the deal would happen only after the auction of telecom frequencies in February and after the government offers more clarity on merger and acquisition rules.
According to sources, the group was even ready to offer the management control to a new investor. The comments come days after Videocon received a pan India license for providing Internet service and ahead of the auctions where the government will offer airwaves in multiple GSM bands.
Current rules allow mergers and acquisitions among operators as long as the combined market share of two entities doesn't cross 50%. A company acquiring another having government allotted spectrum must pay market price for that spectrum, a condition that telecom operators believed thwarted possibilities of M&A.
With 8.6 million customers, Videocon Telecom is among the smallest players in India's telecom market, which has 12 operators including state-run companies who offer voice and data services to more than 950 million mobile phone users. Experts say the country's telecom sector is best suited for consolidation as most international markets have not more than four to five carriers.
Part of the oil-to-DTH conglomerate, Videocon Telecom has licenses in seven circles, but offers services only in Punjab, Haryana, Madhya Pradesh, Chhattisgarh and Gujarat.
It previously had licences and bandwidth in all the 22 telecom zones in the country, but lost all after a 2012 Supreme Court order that revoked the permits of several operators, including Videocon, citing irregularities in the previous allotment process.
