Experts wary of RIL's bid for T-Mobile in Europe | Economic Times

Reliance Industries may not be able replicate the success of its India telecoms operations in Europe with a potential bid for T-Mobile Netherlands, brokerage UBS has said after a newswire report said RIL is weighing a bid for Deutsche Telecom’s Dutch arm.The Mukesh Ambani-led conglomerate’s telecom arm Reliance Jio Infocomm has “benefitted from relatively unique circumstances in the India market, which might not necessarily be replicable in Europe,” UBS said in a note on Tuesday.“RIL has not previously indicated any intention to expand into Europe and has always remained more focused on domestic expansion,” which is why it’s “not clear” whether such a move would fit within its strategic and financial framework. More so, since RIL is “a diversified conglomerate with significant investments in other industries such oil, chemicals and retail”, UBS said.Earlier, a news report, citing unnamed sources, said RIL is working with an advisor to evaluate an offer for T-Mobile Netherlands BV, and that Deutsche Telekom is reportedly seeking about 5 billion euros ($5.9 billion) in any sale.85221182At press time, RIL and Jio did not reply to ET’s emailed queries. “It’s highly unlikely that RIL will splurge such huge sums in an overseas M&A when the conglomerate’s prime target market remains India,” a senior industry insider told ET.UBS noted that in terms of financials, each of the RIL subsidiaries “is self-funding and, combined with the presence of minority investors, it is not clear if there is the capacity for large M&A”.Jio has built up a mobile subscriber base of 441 million (37% market share) in India since its commercial launch in 2016, by initially launching with a free product, the brokerage said.India’s telecom industry has been weighed down by over Rs 8 lakh crore of debt and has been in the throes of fierce price wars ever since Jio entered the sector five years ago and disrupted it with free voice calls and low data prices. Older carriers were forced to match rates to retain customers, putting immense pressure on their revenue and profits. Fringe players that couldn’t handle the competition exited, while erstwhile Vodafone India and Idea Cellular, were forced to merge. Subsequently, rapid consolidation has shrunk the sector down to three large private players — Vodafone Idea (Vi) and Bharti Airtel among the older ones, and Jio — from as many as 10. With Vi's continuing struggle for survival, the likelihood of the sector being further reduced to a duopoly is not ruled out.UBS said a successful RIL bid for T-Mobile-Netherlands would be negative for the Dutch and broader European telecoms market.