India mobile giants merge

The Indian cellular phone market grew by 90% last year

By Sanjeev Srivastava in Bombay

Two Indian mobile phone giants have merged creating the country's largest cellular services operator worth about $2.2bn.

BPL communications and Birla-AT&T-Tata (BATATA) announced the move - BPL will hold a 49.32% stake in the new company while BATATA's stake will be 50.68%.

Market data

3.7 million subscribers

Grew by 90% last year

New company expects 26% market share

Will cover lucrative southern and western market

A statement issued by the companies said the new entity will move towards a common brand name and a corporate identity in a phased manner.

The merger is the largest in the country's cellular phone business which was deregulated in the mid 1990s.

Analysts say the new company should be able to carve out a big share of the cellular business in southern and western India.

This is because BPL already holds cellular licenses for Bombay, Maharashtra, Tamil Nadu and Kerela while the mobile licenses for states such as Gujarat, Madhya Pradesh and Andhra Pradesh are with BATATA.

Growing market

The new company will therefore begin with a subscriber base of about one million cellular phone users.

This is about 26% of the total cellular phone market in the country estimated at about 3.7 million.

The new company will offer world class quality service to consumers

Kumaramangalam Birla

The Indian market grew by 90% last year according to the Cellular Operators' Association of India.

This is the first really big ticket merger in the Indian cellular phone market since last year, when US telecom giant AT&T joined hands with the Indian business groups Birla and Tata.

Industry observers say the joining of the two cellular phone giants could lead to more such mergers.

Ratan Tata, chairman Tata Industries, said the Indian consumer should benefit by this joint venture which will cover 38% of the country's population and 51% of all fixed line telephone users.

"The new company will offer world class quality service to consumers and will also pursue the future expansion of its footprint," said Kumarmangalam Birla, chairman Birla group.