Home»News Alerts»Idea Cellular, Vodafone India may merge, set to create India’s largest telco, beat Bharti Airtel

Idea Cellular, Vodafone India may merge, set to create India’s largest telco, beat Bharti Airtel

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The merger of Vodafone India and Idea Cellular would create the country’s largest player with a revenue market share of 43% leaving Bharti Airtel in the second slot with a share of 33%. The merger of Vodafone India and Idea Cellular would create the country’s largest player with a revenue market share of 43% leaving Bharti Airtel in the second slot with a share of 33%.

Vodafone India and Idea Cellular — the country’s second and third-largest mobile operators — on Monday said they were in talks for a potential merger. Should it fructify, the merger would create the country’s largest player with a revenue market share of 43% leaving Bharti Airtel in the second slot with a share of 33%.

The discussions signal an acceleration of the consolidation process in the intensely competitive telecom market which could put an end to the debilitating tariff war and boost the industry’s profitability.

Speculation on a merger has been in the air for several months now especially after Idea Cellular, which has been weighed down by debt and bruised in the tariff war, initiated a restructuring of group companies to be able to channel more resources into the telecom business.

With a big chunk of 3G and 4G spectrum, the merged entity will be well positioned to take on both Bharti Airtel and the new operator, Reliance Jio Infocomm. Its total revenue at over Rs 80,000 crore will be smaller than Bharti Airtel’s consolidated revenue of Rs 96,532 crore in FY16 but bigger than revenues earned by Bharti’s India operations of Rs 70,843 crore.

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Analysts point out the synergies come in the form of a stronger urban footprint for Vodafone and a bigger presence for Idea is the hinterland. Circle-wise the split will be 50:50 with the combined entity commanding the highest RMS in 11 circles and coming second to Bharti in the other eleven. The merged entity’s Ebitda is also expected to improve by 25-30% on the back of lower costs.

There could be some challenges on the regulatory front. The merger and acquisition rules mandate that no operator can own more than 25% of the total spectrum allocated in a circle and 50% in a given band. Further, the RMS of an operator

Article source: News Source

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