Vodafone Idea merger talk came to the news last month which is no doubt a great deal in the telecom sector. This deal if gets implemented in the real scenario will create such a big consolidation in the industry. However, the deal must go through some regulatory hurdles which might turn the deal into a sour one. And this is a big concern. TRAI (Telecom Regulatory Authorities Of India) has already stated their views were saying they will look into the matter when any regulatory issue arises. TRAI chairman R S Sharma also stated that this Vodafone India deal is a complete business decision. So, he would like to refrain himself from throwing any comments. But as any issue arises, advises will be offered to the government.
As per TRAI, the deal is in the premature stage now. And both the companies need to go through some agreements first for the deal to get implemented.
Vodafone and Idea both have acknowledged that they are in talk for the merger operations. It was actually confirmed by the Britain’s Vodafone group that they are seeking to merge their Indian unit with Idea Cellular. And this merger would be an all shares deal to successfully create the largest telecom operator in India.
Vodafone, the second largest cell phone network operator across the globe, entered the Indian market in 2007. Since then it had to go through numerous tumultuous ride such as high profile tax battle, price wars, etc. to survive. And last year the situation got worse when Mukesh Ambani brought Reliance Jio Infocomm in the market. Stuff like free calls, low-price data from Reliance Jio put other three big operators Vodafone, Idea, and Bharti into turmoil. All these three operators faced harsh situations like slashes in price, lower profits, etc.
Now if these two big operators get merged, they will be able to pose a frightening competition to Reliance Jio and Bharti Airtel. According to Idea Cellular, they continually look for opportunities to enhance their stakeholder’s value. So, if this merger idea gets implemented, Vodafone-Idea will lead the Indian market for sure. It will also become one of the largest telecom operators Worldwide definitely.
This deal will be fruitful in both the cases subscribers and revenues. The main areas in which both the company will gain advantages are:
- It is expected the merged entity to have a strong user base of 395.21 million that is much more than Airtel and Reliance Jio. Currently, Airtel leads the market with a great number of the user base of 265.85 million while Jio has 72.4 million users. Considering Jio entered the market in 2016 only, this growth is highly noticeable.
- The Vodafone India merged deal will be benefitted in terms of market share as well. Vodafone has a market share of 25.27%, and Idea has 23.52%, so the combined entity will witness a market share of 49 percent altogether. And this is highly impressive considering the market leader Airtel has a share of 32.82%.
Also, both the companies complement each other geographically, and they are no doubt a great match. Their strength and weaknesses match very well. So, altogether it would be a great deal in the telecom industry.