Reliance Industries has been quite successful in India in telecom operations, but it may not be able to replicate the same in Europe with a potential bid for T-Mobile Netherlands. This was noted by brokerage UBS after a newswire report stated that RIL is eying to bid for Deutsche Telecom’s Dutch arm.
Reliance Industries Eyes Expansion In Europe?
Reliance Jio Infocomm, the telecom arm of the conglomerate chaired by Mukesh Ambani, has benefited from relative unique scenarios in India that might not work in Europe, noted UBS. It has been noted that a successful RIL bid for T-Mobile-Netherlands might be negative for the Dutch as well as the broader European telecoms market.
Previously, RIL has not revealed any intention to expand its telecom operations in Europe and has remained highly focused on its expansion within India. Eventually, the company has no clarity if the same move will fit within its financial and strategic framework. Moreover, RIL is a diversified conglomerate with vital investments in other industries, including retail, chemicals, and oil, noted UBS.
One of the earlier reports citing anonymous sources stated that RIL is discussing with an advisor to estimate an offer for T-Mobile Netherlands BV. Also, it stated that Deutsche Telekom is looking for nearly 5 billion euros in any sale. However, neither RIL nor Jio replied to these claims.
Overseas M&A Unlikely For Jio
In this scenario, an ET report citing a senior industry insider notes that it is highly unlikely for RIL to invest a huge sum in an overseas M&A as the prime target and focus of the conglomerate is India. Also, UBS said that in terms of financials, the subsidiaries of RIL are self-funding and have the presence of minority investors as well. It remains to be seen if there is a provision for the conglomerate to invest such huge sums in a large M&A.
Reliance Jio Success In India
Since its debut in September 2016, Reliance Jio has built up a subscriber base of 441 million, which is 33% of the Indian telecom market. This was possible with the launch of a free product back then. The telecom industry in India has been weighed down by more than Rs 8 lakh crore of debt, and it set forward a fierce price war in the industry by disrupting the segment with free voice calls and aggressively priced data plans.
This move has urged other operators to retail customers by compromising on their profits and revenues. Fringe players exited the market, and Vodafone and Idea merged to form Vi. Eventually, there are only three major telecom players in the private sector - Airtel, Vi, and Jio instead of 10 in the past. Moreover, Vi is still struggling to survive this competition.