Vodphone India-Idea Cellular Merger

Vodphone India-Idea Cellular Merger

Vodaphone Idea Merger

Vodphone India-Idea Cellular Merger

Idea Cellular Ltd finally agreed to merge with Vodafone India to create country’ largest mobile service operator. Vodafone will hold 45.1 percent and Aditya Birla Group, promoter of Idea Cellular will hold 26 perent stake of the merged entity.

Currently Vodafone India and Idea Cellular holds the No .2 and No. 3 positions respectively after Bharti Airtel which holds No.1 position with largest user base. Both Vodafone and Idea Cellular brands will continue their services. Although two brands leads to higher expenditures.

The merged entity will have a market share of 42 percent by revenue, approx. 9 percent more than Bharti Airtel. The merged entity is estimated to have revenue more than Rs. 80,000 crore which was earlier dominated by Bharti Airtel with revenue of more 50,000 crore last fiscal year.

The merged entity should not have more then 50 percent revenue and subscriber base. Excess spectrum will be surrendered or sold.

The smaller telecom companies are likely lose market share in near future. Reliance Jio’s free voice calls for life resulted in price cut of all operator leading to low revenue and profit. All mobile service providers now focus more on mobile broadband to increase revenue..

With entry of Reliance Jio, consolidation in Indian telecom market started.  Reliance communication already done merger of MTS, owned by Systema Shyam Teleservices(SSTL). MTS customers will have option to migrate to Reliance communication 4G network. Reliance Communication Ltd. and Aircel Ltd. also announced plans to merge together.  RCOM now initiated talks with Tata teleservices for consolidation.  As of now Reliance Jio has more than 70 million customers.

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