Anil Ambani: He always preferred GSM

When consolidation is the mantra in the mobile telephony space, you don't expect a new player to throw its hat into the wireless ring. But then Anil Ambani's Reliance Communications isn't exactly a new entrant, having at last count garnered close to 20 million subscribers with its CDMA service (currently Tata and Reliance are the two CDMA service providers). Reliance also has a GSM play, providing services in seven marginal circles via its initial foray into telecom in the mid-90s. Now, however, Ambani wants to go the whole hog in GSM, and in the process compete head-on with the likes of Bharti and Hutch, by launching these services in Delhi and Mumbai. These two metros are the most lucrative markets, accounting for close to 2 per cent of the country's subscribers. The average revenue per user (ARPU) too is pretty attractive, at about Rs 500 each per month for Delhi and Mumbai.

Reliance Communications has sought permission to use the 1800 mhz frequency (considered ideal for both GSM and CDMA) under which it has asked for 4.4 mhz of spectrum. Interestingly, this request comes at a time when rival CDMA operator, Tata Teleservices has been at loggerheads with the government on the issue of spectrum allocation (the Tatas contend that subscriber base cannot be the criterion for deciding who gets how much). Reliance Communications officials were tight-lipped on the plans.

Will Reliance get the additional spectrum it's asked for? Experts in the telecom industry point out that the spectrum will be given since Reliance will be operating on a different technological platform. Reliance has some 2.5 million GSM subscribers in Madhya Pradesh, West Bengal, Bihar and the North-East. Till not too long ago, the Tatas, with Tata Teleservices and its holding in Idea Cellular, also seemed to have a dual CDMA-GSM strategy. But the Tatas recently decided to offload their 48.14 per cent stake in the cellular firm to the Aditya Birla Group (which will own over 98 per cent). Incidentally, Idea Cellular is scheduled to commence its GSM services in Mumbai soon. The state-owned units MTNL and BSNL too have very small GSM operations. Worldwide too, barring China Unicom, there is no other player offering services on both the platforms. The total subscriber base for China Unicom today is 132 million, with GSM accounting for 75 per cent of it.

(Still) A Land Of Plenty
Real estate funds investing in India are thinking long term.

Till recently Ravi Krishnan was the head of IMG India, a sports and lifestyle management company. Krishnan is credited with conceptualising the erstwhile Lakme India Fashion Week and the Indian Open ATP Tennis Tournament. He's now in charge of a yet unnamed Israeli-Australian real estate fund with a corpus of $100 million (Rs 450 crore). To be sure, that's not the only fund that has its sights trained on the domestic property market. Over the past three months India-specific real estate funds armed with a little over $2.5 billion (Rs 11,250 crore) have set up shop in the country. And that figure could go up to $10 billion (Rs 45,000 crore) by the year-end.

As money conditions tighten, as the stock markets turn distinctly bearish, with real estate threatening to go the same way, should these funds be worried? Shishir Baijal, CEO, Kshitij Investments, a retail-focussed investment group promoted by Pantaloon's Kishore Biyani, thinks not. "With Kshitij Funds, we will see an internal rate of return of 30-odd per cent. We expect the retail sector to grow between 20 and 25 per cent over the next five years." Adds Ishan Singh, Founder-Partner, re Capital, another real estate fund: "Everywhere in the world, investors are looking for returns, and the Indian real estate market is promising attractive returns."

-Kushan Mitra

M&A Deals Roll On
Indian companies' appetite for cross-border buyouts is intact.

Jindal Steel's Navin Jindal (L) and UBS' Girotra: India's growth story continues

Conventional wisdom would have it that volatility in stock markets is a deal dampener. After all, when prices are yo-yoing, it isn't easy to figure out the precise worth of target companies. Activity in mergers & acquisitions (M&A) slows down further when markets get bearish as buyers want to protect their earnings and price-earning (p-e) multiples, and sellers don't want to bow out for a song. But if the activity of India Inc. in overseas markets last fortnight is anything to go by, the outbound M&A bandwagon continues to roll smoothly, the global turbulence notwithstanding.

Consider: Ballarpur Industries snaps up a Malaysian pulp and paper mill for $230 million (Rs 1,035 crore). Jindal Steel & Power commits to invest $2.3 billion (Rs 10,350 crore) in iron ore mines acquired in Bolivia. Tata Tea, famous for its buyout of Tetley of the UK in 2001, says it's looking for more acquisitions in countries such as Russia and South Africa. Tata Steel is said to be close to acquiring South Africa's Highveld Steel. And a securities services company, Topsgroup, was at the time of writing, apparently haggling over valuations in a bid to close out an estimated $40 million (Rs 180 crore) deal with a UK company in the same space. Topsgroup Chairman Rahul Nanda told BT that an announcement will be made in a couple of weeks. Wipro recently bought a Portuguese retail solution provider for m41 million (Rs 237.8 crore) and followed it up with the buyout of Finland's Saraware for m25 million (Rs 145 crore).

If India Inc. is still looking outbound, it's largely because it hasn't been trapped in the global liquidity squeeze (not yet, at least). Companies, particularly the large cap ones, are sitting on huge cash reserves, which makes acquisitions easier. For instance, Ballarpur, as of 2005, had a net worth of Rs 1,500 crore. If anything, the eroding equity prices offer Indian companies an opportunity to pick up assets at more attractive prices.

The acquisitions are also being made with the long term in mind, which helps managements look beyond the current bouts of volatility and price erosions. Consider Ballarpur's acquisition of SFI of Malaysia, which has a paper-making capacity of 1.5 lakh tonnes per annum and 1.2 lakh tonnes of pulp. Says Group Director (Finance) B. Hariharan: "In three years, we should be in a position to bring pulp to India." "All said and done, India's growth story is intact and I think there will be some serious action in sectors such as pharma, oil and gas, steel and auto ancillaries," adds Manisha Girotra, MD & Chairperson (India), UBS Securities.

Girotra cautions that if the benchmark Sensex slips into the 7,000-8,000 range, there could be a slowdown in cross-border transactions. Yet, for Indian buyers looking out to extend their international footprints the subdued market conditions might just provide the perfect hunting ground.

-Krishna Gopalan

Big Bang In Bolivia
Naveen Jindal bags iron ore mines there-finally.

It's been an agonising wait, but it's been well worth it for Naveen Jindal's Jindal Steel & Power.

It was in 2004 that the Bolivian government announced an international bid for the development of the Mutun Mines, home to iron ore reserves of 20 billion tonnes. And as Suhil Maroo, Wholetime Director (Finance), Jindal Steel & Power, reveals: "We have been participating in all negotiations and discussions with the government of Bolivia since 2004."

Several global metals majors threw their hat into the ring, but it's Jindal that's been declared the winner after much to'ing, froing and wooing. Maroo says the lease period is for 40 years. "We have proposed the following facilities to be set up there over eight years: a 1.7 million tonne steel plant, a 6 million TPA (tonnes per annum) sponge iron plant and a 10 million TPA pellet plant." The proposed investment in these facilities: $2.3 billion (Rs 10,350 crore).

-Amit Mukherjee