M&A rules for telecom sector difficult: Vodafone India

Merger and acquisition rules in the current form make it "difficult" for consolidation activity to pick up in the telecom industry, a top official of Vodafone India said today.
"It is difficult and that's I think why you haven't seen it happening...The only M&A that I have seen is actually Bharti buy Loop," Vodafone India MD and Chief Executive Officer Marten Pieters said here when asked if merger and acquisition (M&A) rules are not feasible.
He said though M&A policy has come, so in theory, one can do M&A but looking at an individual company, the buyer might only be interested in few assets and not the overall company which has a lot of debt.

Giving an example, he said, "We love to buy 3G spectrum but for 3G spectrum, if I have to buy complete operator who has 3G spectrum ... It comes with all kinds of stuff I don't want because I have it all. So, it is very difficult to make an attractive proposition in such a situation," Pieters said.
He said there might be some consolidation activity in the sector after the release of spectrum trading guidelines.
"For us the most important asset of a telecom company would be its customers or spectrum. I am more interested now in spectrum which you are not allowed to strip out as you need spectrum trading to be allowed to do that, so the moment that will be allowed, I expect some movement would happen," he said.

Asked if the company is open for acquisitions, Pieters said the company constantly follows the market for opportunities but with spectrum trading they can buy airwaves only and not the whole company.

"We are of course constantly following the market and looking at opportunities but if spectrum trading would be allowed ... Companies, which have huge debt, can be convinced to sell spectrum which is underutilised," he said.
"This would be very attractive for us because when you buy clean spectrum it does not come with all the stuff that you have already," he added.
Asked that spectrum trading is not M&A, Pieters said it is also a form of consolidation.

"It is a different way of consolidation, it's also consolidation but it's not consolidation by merging total companies," he said.