You are already aware of the exuberant deal between NTT DoCoMo and Tata Telservices at the time of global economic crisis. Certainly, Tata’s need to be congratulated as they were able to command a 50% premium valuations to India’s leading mobile operator – Bharti Airtel [basis of EV / Subscriber Model, explained below], despite their half-hearted, unplanned and flip-flop telecom strategy.
Tata’s were one of the original promoters of Idea Cellular who exited in 2006 as they thought CDMA was the way to go. [ A business opportunity that emerged after Reliance lobbied with then Telecom Minister Pramod Mahajan] Not a bad idea at all.
In 2006, talks failed between Qualcomm and Indian CDMA operators over various issues. RCom announced its grandiose GSM expansion plans. Late 2007 and early 2008, telecom policies were fine tuned to benefit RCom and few others, Tata Tele by now had realized CDMA alone won’t help it make to make it to the Top-5 Telcos in India and thus threw its hat and got a GSM berth and is now planning to unveil a PAN-India GSM network.
Tata’s being one of the oldest industrial houses in India should lead and not follow. To me it seems like Tata’s have been following into the footsteps of Reliance, not just in Telecom but also in Energy / Power sector. [Another story on how they diverted funds from Tata Power and lost half of it for their broadband ambitions]
Valuation of Indian Telecom Companies – Bharti Airtel, Reliance Communications, Tata Teleservices
- Bharti Airtel has an Enterprise Value of Rs 1.2 1Trillion with 80 mn subscribers
- Reliance Communications has an Enterprise Value of Rs 571 Billion with 57 mn subscribers
- Tata Teleservices’ Enterprise Value is estimated to be Rs 590 Billion with 25.5 mn subscribers
Now on the basis of EV / Subscriber, Tata Teleservices valuation was at an Irrational Premium of ~50% to Bharti Airtel and ~125% to Reliance Communications [WTF!!!] Does Tata Teleservices really deserve this premium in current market scenario ?
Now does NTT DoCoMo know more than what we do ? What is that it could be ? Will Tata’s consolidate all its Telecom Operations under Tata Teleservices ? Additionally, as we move forward into 3G, NTT DoCoMo is one of the pioneers in Value Added Services and will probably introduce them into the Indian market. Shall we now expect Anil Ambani to strike a deal at higher valuations 😉