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By Nivedita Bhattacharjee and Sumeet Chatterjee
MUMBAI, Nov 3 (Reuters) - India's crowded telecoms sector ispreparing for a long-awaited shake-up as highly indebted playersjostle for access to costly airwaves and brace for the launch ofa deep-pocketed new rival backed by India's richest man, MukeshAmbani.
Ambani owns oil-to-retail conglomerate Reliance Industries, which is expected to begin offering fast dataservices across India by early 2016.
With about 980 million wireless users, India's mobile markettrails only that of China. But despite impressive growth rates,many firms are struggling with balance sheets stretched bycostly spectrum auctions and rock bottom tariffs, making thetelecoms sector in India prime for mergers and consolidations.
In the first such move in seven years, RelianceCommunications (RCom), owned by Ambani's youngerbrother and rival Anil, has agreed to buy Russian groupSistema's Indian mobile phone business.
"One thing is clear: India has too many players and too muchregulation in this space. Not everybody can make a profitablebusiness out of it on a sustainable basis," said a telecoms andtechnology M&A banker with a leading U.S. bank.
"The dealmaking conditions were ripe for many years, but thepush is now coming from Reliance's entry into the sector," hesaid. "There will be a few more deals happening over the nextcouple of years, and some (players) will fall by the wayside."
The arrival of Reliance Industries into the sector, underthe brand name Jio, will further squeeze players such as RComand Bharti Airtel.
Bankers expect smaller players to be pushed into the arms oflarger rivals, bulking up to battle Reliance's Jio.
Currently most carriers operate on wafer-thin margins, with8 of the dozen carriers, including Aircel -- a unit ofMalaysia's Maxis Communications Bhd -- and Tata Teleservices,holding a market share of less than 10 percent, according tosector regulator TRAI.
Players including Aircel, which owns coveted 3G and 4Gspectrum, could be a likely buyout target, analysts and bankerssaid, in a market overshadowed by large players including BhartiAirtel and the Indian unit of Vodafone. Aircel did notimmediately respond to an email seeking comment.
Tata Teleservices, the seventh-biggest mobile operator, is,according to sources, looking for a buyer for the stake Japan'sNTT DoCoMo owns in the joint venture. DoCoMo decided topull out last year, as the JV did not meet performance targets.
RCom's Monday deal gave it access to more high-speedfourth-generation spectrum that Sistema owned, critical at atime when there is a huge demand for quality and fast dataconnection as more Indians access the Internet through theirsmartphones.
Others will follow suit, bankers and analysts said.
"The industry world over has three to five major players.India has to follow that," said Hemant Joshi, a partner atconsultancy Deloitte in India. (Editing by Clara Ferreira Marques and Keith Weir)
