Editorial: Telecom consolidation

If Wednesday's move marks the end of one phase in the telecom industry's consolidation, another round is likely in the not distant future, and for the same reason that Spice got sold. There are now six pan-Indian players, to which the government added another nine players some months ago by giving them licences for 120 telecom circles. Like Spice, players with only a few circles will lack economies of scale; the larger ones with pan-Indian licences will be better off, but the government has still to release spectrum for them and, on the off chance that they have the $2-3 billion required to roll out an all-India network, the market will be pretty saturated. In other words, even the strongest of the new players will have to struggle that much harder to be viable. It is possible therefore that several of the new licensees will be up for grabs.

Meanwhile, existing players such as Airtel and Vodafone will want to buy companies that have spectrum, especially if they themselves don't get 3G spectrum