Chinas Top Cell Firm Valued At 20 Times Bpl-Btal

Chinese telecom majors could simply gobble up their Indian counterparts if they want and these would simply be footnotes in their balance sheets.

In a recent report, Merrill Lynch points out that China's largest mobile phone company, China Mobile, is valued at a massive $60 billion. In contrast, the BPL -Birla- Tata-AT&T combine's valuation has been pegged at $2.5 billion. Bharti Televentures, the holding company of the Bharti group, has been valued at $3.5 billion, while the Essar-Hutchison combine has been valued at $2.2 billion.

However, the silver lining according to analysts is that the valuations of Indian cellular companies are now poised to go up with substantial reforms in the telecom sector. With the addition of new customers, the valuations of the Indian companies will rise.

Valuation of cellular companies is of critical importance since this determines the their ability to tap the domestic and international capital markets. Typically, valuations are driven by future growth projections.

On this front, India still has some catching up to do as it is five years behind China in cellphone penetration, industry studies indicate.

India's estimated subscriber base of over 5.2 million pales into complete insignificance when compared with the present Chinese subscriber base of 130 million. China had crossed the current Indian susbcriber base way back in 1996.

Despite an impressive rise in the cellular base and projections of a manifold rise by organisations like Cellular Operators Association of India (COAI) and Gartner, the cellular penetrations stand at just 0.5 per cent.

Interestingly, both China and India have populations in excess of one billion and urban populations form around 30 per cent of the total. China, however, has a much higher per capita gross national product (GNP) of $3,300 against India's per capita of $2,150.

"Although India and China are comparable in demographic terms, China has attracted heavy global investments even as Indian cellular operators are struggling to attract overseas investments into the capital-oriented telecom sector," said a telecom analyst with a leading brokerage.

Indian telecom companies must be just hoping that the Chinese just don't cross the border on this one.