There have been rumours in the financial markets for some time regarding a potential sale of Hutchinson Telecommunications International Limited’s (HTIL) Indian mobile phone operations.  The rumoured buyer is Indian mobile phone outfit Reliance Communications, who in conjunction with a private equity house, are rumoured to have offered some US$14 billion for the Indian subsidiary.  While this is not a reflection of the current trend in the Indian market, it is most definitely a reflection of the expected future growth.

The Indian mobile phone market is expected to show very strong growth for many years to come as the current time lag between the growing economy, and mobile phone sales catches up.  The Indian market has very low penetration, fast rising incomes, a growing middle class, great infrastructure and a media rich culture which is making a name for itself on the world stage. 

The change in the fortunes of India had been forecast by many for years, but it seems that with each introduction of new technologies the country takes a further step forward, attracting large inward investment from overseas employers, keen to tap into the cost effective pool of high quality employees.

Currently Reliance have a 21% share of the Indian mobile phone market, although should the HTIL deal go through they would over take the current leader Bharti Airtel, who currently have a 23% share.  It is a sign of strength in the India corporate sector that Reliance are able to put together such an attractive proposition for HTIL, who are one of the largest mobile phone companies in the world (even though they have been looking to reduce there mobile phone exposure in recent times).  Whether other foreign investors, or other Indian companies will enter the fray at this late stage appears unlikely but not out of the question.

Quite where a deal of this nature would leave HTIL is not clear, as the company receives 67% of their overall income form the Indian market.  Whether they are looking to establish a foot print in one of the other emerging markets, such as Chine (now number two in forecast growth, behind India) remains to be seen.  What is obvious is the fact that the Indian market has never been so buoyant, with rising incomes, more inward investment and above all, a willingness to adapt and redevelop its offering.

After a number of false starts, India is set to become one of the financial powerhouses of the world.