Money Matters

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As the world debated over the global competition in the recessionary times, the domestic telecom sector raised whopping amounts of money from the market. Much to the chagrin of other prime sectors, the telecom industry revalidated its strong fundamentals by getting positive responses.

Recently, when Aircel, the Indian arm of Malaysian telecom giant Maxis Communications, has raised a debt of $3 billion for expanding its operations, the markets went in a frenzy over this colossal deal which ascertained the trust that the market reposed in the telecom space. This deal is not an exception as the telecom trajectory was high on growth with the banks and domestic markets subsidizing in a big way. Unitech Wireless, a joint venture of the Telenor Group and Unitech also tied-up with the State Bank of India for Rs 5,000 crore.

Interestingly, the money generating telecom sector was the highest borrower from overseas in the three years beginning 2006. Cumulative external commercial borrowings of telecom firms between January 2006 and September 2008 stood at a whopping Rs 32,913 crore, according to the RBI.

Well, the banks are also in race to finance the much followed after merger of Bharti-MTN. HSBC and Barclays are in talks with Bharti Airtel to fund the deal. The willingness of the banks has triggered fresh hopes in the telecom space to venture for new potential opportunities as they get the economic assistance. Wireless major Bharti Airtel is keen to generate $5–6 billion for the possible Bharti-MTN merger.

There seems to be a little evidence that the economic crisis has been a friction in the dynamic industry of telecom. Indian telecom markets experienced a robust growth throughout. The country's mobile subscriber base has already grown from around 10 million in 2002 to 350 million by the start of 2009. The tremendous financial aid that has been given by the government, banks, institutions has played a catalyst in catapulting the rise of telecom space.

The government also cleared 10 foreign direct investment (FDI) proposals worth Rs 1,123 crore ($230.5 billion), including one by DishTV to raise Rs 750 crore through convertible bonds.

Not only the Indian banks but even overseas banks have shown an inclination to support the Indian markets. The Export-Import bank of the US has made a commitment of $7.2 billion to assist the telecom and other sectors of the country. This can help the operators to look for viable options in several mature and emerging economies of the world. India is no doubt a lucrative market for the western firms who are looking for new avenues in the Indian telecom space.

The financial aid supplemented by aggressive marketing by the operators will take the buoyant and strong Indian telecom sector to new heights the coming years.