Idea - Vodafone merger: IT's a shakeout!

  • Two merger announcements on the same day speak of a coming together of India's telecom providers. That can only be good for the consumer

All within one hour on Monday, March 20, two key mergers in the Indian telecom industry, sharply reduced the number of players and created large groups with the staying power to survive and succeed in what has become an increasingly challenging business.

Idea Cellular and Vodafone India said that their respective boards have approved their merger, to create India’s largest telecom company with a total revenue of over Rs 80,000 crore.

Says Vodafone Group CEO Vittorio Colao: “The combined company will have the scale required to ensure sustainable consumer choice in a competitive market and to expand new technologies—such as mobile money services—that have the potential to transform daily life for every Indian.”

The combined company would become the dominant telecom provider with some 400 million customers, and a 35% market share of customers. It would push Airtel ( which has already bought out the business of Telenor) into second place, with 270 million customers

At almost the same time, Reliance Communications said it had obtained an approval of the Competition Commission of India (CCI) for the proposed scheme to bring together its telecom business and that of Aircel and Dishnet Wireless. The Company has already received approval from the Securities and Exchange Board of India (SEBI), BSE Limited (BSE) and National Stock Exchange of India Limited (NSE) for the proposed scheme. The combined entity would have assets worth Rs 65,000 crores, making it possibly the number 3 player in India.

Many of these mergers may have been in part triggered by the aggressive entry of Reliance Jio. This is headed by Mukesh Ambani, not Anil who heads Reliance Communications. Jio claims it signed up over 100 million subscribers in 100 days but they are all on free plans and it remains to be seen how many stick as paying customers, come April 1.

Tata Teleservices is as yet a solo player but for how long? It may join Reliance Comm- Aircel -- that is the wisdom in the bourses.

At any rate,these consolidations (we anticipated these happenings on this page on March 17) may see even more aggressive pricing unleashed in India for data services, with voice virtually free. That can only be good for consumers. Let the price games begin!

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Topics : #Telecom

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