Vodafone-Idea Merger: May Build India’s Biggest Telco
Vodafone-Idea Merger: Yesterday, 30th January, 2017, Vodafone India and Idea Cellular-the India’s second and third largest mobile telecom operator said that they were in talks for a potential merger.
The main purpose of this merger deal is to create the country’s largest telecom operator with 43 per cent revenue market share.
The Vodafone-Idea Merger entity will pose formidable competition to the current market leader Airtel and aggressive new competitor Reliance Jio.
And the biggest hurdle to the Vodafone-Idea merger will come in form of regulatory approvals and practical implementation challenges, warn industry experts who among other issues, cite breach of revenue market share and spectrum caps in five of the 22 telecom circles.
According to reports, they said that the merger of India’s second largest mobile operator with the country’s third largest cellular operator would create company with over 395 million users and form one of the biggest telecom companies in the world.
The UK-based company said that it is in talks with Idea Cellular about an all-share merger but the deal under consideration excludes its 42 per cent holding in Indus Towers, a joint venture with Bharti and Idea.
The company also added that, “any merger would be effected through the issue of new shares in Idea to Vodafone and would result in Vodafone de-consolidating Vodafone India.
There is no certainty that any transaction will be agreed, nor as to the terms or timing of any transaction.”
Since 2007, Vodafone India has become number two operator in the country, but its journey has been tumultuous as it is locked in a legal battle with the government over a USD 2 billion retrospective tax claim over its acquisition of Vodafone India from Hutchison in 2007.
While today, Bharti Airtel is the largest mobile operator with 265.8 million users, Vodafone has 204.6 million users and Idea Cellular 190.5 million users.
On 15th November, 2016, the Vodafone India had stated that it has registered a 2.60 per cent growth in its pre-tax profit for the April-September period at Rs 6,704 crore.
The company’s revenue growth stood at 5.9 per cent at Rs 22,579 crore during the reporting period.