Dialling M&As in telecom

If telecom stocks have rallied the way they have over the past few months—Idea by 40% in the last 4 months and RCom by 100%—it is because things finally seem to be changing for the sector, the latest being telecom minister Kapil Sibal’s statement that M&A norms would be announced by the end of the month. Prior to this, with the new lot of licensees getting out of business, tariffs started rising and, more recently, the government agreed that it would refer the matter of the base price for the 2G auctions back to the telecom regulator—this is critical since the new auctions will provide new spectrum for starved operators, determine the price they pay for the ‘extra spectrum’ they hold, and also pave the way for their existing 2G licences to be renewed.

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