In a move which possibly would change the Indian telecom sector, Vodafone has today confirmed that it is in talks with Aditya Birla Group about the potential merger of Vodafone India and Idea Cellular.
The statement read – “Vodafone confirms that it is in discussions with the Aditya Birla Group about an all share merger of Vodafone India (excluding Vodafone’s 42% stake in Indus Towers) and Idea. Any merger would be effected through the issue of new shares in Idea to Vodafone and would result in Vodafone deconsolidating Vodafone India.
There is no certainty that any transaction will be agreed, nor as to the terms or timing of any transaction”
As a result of this, Idea Cellular shares hiked up by 29 percent over the weekend in intraday trade.
To analyse the aftermath of this merger, Vodafone and Idea combined will then capture about 43 percent of market share beating Airtel’s current 32 percent. Further, the subscriber count for the merged entity will then amount to near 39 crores which are way more than Airtel’s 27 crores and Jio’s 7.2 Crore.
The Vodafone-Idea merger would further impose a threat to the infant telecom operator, Reliance Jio. Up till now, Airtel was the main target for Jio given the telecom operator stands strong at the No. 1 position. However, post Vodafone-Idea merger, the task will be further strenuous with a humongous amount of support and resources which the new merged entity will boast. Moreover, Airtel, as a telecom operator, will be hit big time given its resistance to lower down the tariffs.
Image Courtesy: DNA India