Vodafone, the global telecom giant is in talks discussing a merger with another nation grown telecom giant, Aditya Birla’s Idea Cellular. The merger suggests that these two companies are planning to bounce right back after setbacks faced due to the destructive pricing set by Airtel and Jio in the market. Vodafone also claimed in a blog post that it this merger with Aditya Birla’s is an all-share merger of Vodafone India and Idea. The post also added that any merger will be effected through issuance of new shares in Idea to Vodafone and would result in de-consolidation of Vodafone India
A Vodafone-Idea combined would mean that it would have a 43% revenue market in the country. This is huge compared to the 33% share by Airtel and Jio’s 13 % share of the market.
“There is no certainty that any transaction will be agreed, nor as to the terms or timing of any transaction.” -Vodafone in a blog post
Currently Bharti Airtel is the telecom operator which has the highest share in the market and over 265 million subscribers whilst Idea Cellular has only 185 million. However, a merger of Vodafone and idea will command almost 43% of the market share which is huge (according to analysts).
“Our analysis of a potential merger of Vodafone India with Idea Cellular reveals that such a mega deal would change the industry order.” -CLSA
Reliance threatening all telecom services in the country
Reliance Jio had announced free data and calling services in September which were extended to March in last year. It’s recent extension of free calls to 30th June, 2017 has been in the news for quite some time now. Jio’s free services received a crazy response and over five crore people subscribed to Jio in approximately 80 days. Analysts have also predicted that Jio will gain over 7 crore users in another month.
To combat this situation where people are switching to Jio, Airtel has slashed its prices while other telecom industries are also taking drastic steps to ensure their existence in the market.