The second largest cellphone network operator in the world, Vodafone Group Plc (ADR)(NASDAQ:VOD) is having merger negotiations with Idea Cellular in India so as to create what may be called India’s largest Cellphone company. Vodafone confirmed the news yesterday. This would change the telecommunication industry analytics in India, which so far, has been ruled by Bharti Airtel. If this merger emerges as a final deal, it would dethrone Airtel from India’s #1 telecom company, for the first time in 15 years.
Vodafone battles it all in India
Vodafone entered the Indian market in 2007 and since then, it has seen it all. From a tax battle to price war, Vodafone has survived the tide of tumulus competition in the Indian market. The recent merger may possibly change everything in India. Here is why.
First of all, this would be a merger between #2 and #3 telecommunication companies in India and a possible bid to knock off #1, Airtel. Secondly, this would be a strong response to Reliance Jio, which, ever since its announcement has created a wobble in the telcos.
Reliance Jio, with its aggressive pricing strategy against competitors with free calls, free data and nail-bitingly low offers has already created turmoil in India’s telecom industry. With this merger, what would be Reliance’s next move?
The new figures of a merged company
If this merger materializes, the combined Vodafone-Idea company would have as many as 375 million subscribers or almost 36% market share. Airtel, in the meanwhile, has approximately 260 million subscribers at present.
According to the recent statement of two companies, it is indicative that perhaps Idea will not flip the eyes first. It wants equal right in the new company with 50% ownership and even more. Vodafone shall continue to remain listed, but it will be issued fresh Idea shares.
While this may be the best bet for Idea, it would be interesting to see where this would lead the India’s telecommunication industry.
Receive News & Ratings Via Email - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings with our FREE daily email newsletter.