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Mobile operators DoCoMo-MTS-Aircel to merge

New Delhi, Sep 27 () : Mobile operators DoCoMo (Tata Teleservices), MTS (Russia’s Sistema JSFC) and Aircel (Malaysia’s Maxis) are in talks for a merger to form India’s third-largest telecom company in terms of subscriber base.

If the merger takes place, the pooling of infrastructure and funds will help them to reduce investment and operational costs. The merger will see the new entity having a 13.5 core base.

Mobile operators Tata Teleservices and Sistema were already in talks for a merger and Aircel now joining it is a new development. NTT, Japan’s biggest mobile company has a 20 % stake in Tata Teleservices that has a Rs 23, 000 crore debt.

Maxis-owned Aircel has Rs 22, 000 crore debt. Standard Chartered Bank is now working out a debt restructuring plan with the lenders on behalf of Aircel. Russian company Sistema has no such problems and is cash surplus.

In this scenario, MTS would be the dominant partner. The Indian partner to the MTS is Shyam Telecom. Sistema feels that out of the 7 mobile companies, the market will see only four in play as more mergers will take place with foreign investors pushing for it.

MTS suffered a setback when the apex court cancelled licenses in 22 circles for CDMA operations. It challenged the order to win permits to operate in 8 States and has 9 million subscribers. The mobile operators are waiting for new guidelines for the merger and acquisition.

The new entity will be holding extra airwaves and the government might seek a payment. Tata’s CDMA coverage is very wide and this can supplement Sistema voice subscriber while mobile operations sharing of infra will help Aircel and DoCoMo.

SingTel who holds 32.34% in Bharti AirTel is to think about a merger with another player while Videocon felt that it was the natural choice for Airtel. The M&A policy that is soon to come for telecom sector will see eventually just two or three players. The mergers might be good news for the mobile operators but whether it will put the call rates out of range for subscribers is to be seen.