comscore Vodafone India could merge with Reliance Jio or Idea Cellular: Report

Vodafone India could merge with Reliance Jio or Idea Cellular: Report

It seems Vodafone is unable to cope with the cut-throat competition in the Indian market. Its valuation recently decreased by €5 billion owing to competition.


Reliance Jio has taken the Indian telecom market by storm with its aggressively priced data plans, bundled app subscriptions and unlimited free voice calls. The operator has already crossed 50 million subscribers, and is believed to be on course to hit 100 million by March-end. Following Jio s commercial launch, rival telecom operators are under immense pressure to match the competition. Though the likes of Airtel, Vodafone, and Idea Cellular, also top three telcos in India, are announcing aggressive plans to retain their subscribers, they still don t really come close to Reliance Jio s offers. One of the biggest casualties to the growing and intense competition could be Vodafone, which is reportedly seeking a merger with either Reliance Jio or Idea Cellular. Also Read - Vodafone Idea introduces new Rs 82 add-on pack for prepaid users: Check details

Also Read - Airtel launches new Rs 399 and Rs 839 prepaid plans with 3 months of free Disney+ Hotstar subscription

The company has been caught in the crossfire of a sibling rivalry that has triggered a price war and put the brakes on a planned stock market flotation of Vodafone India. The problems have weighed on the FTSE-100 giant s shares in the last year, overshadowing improvements in its core European markets, reports Telegraph. BGR India has reached out to Vodafone, Reliance Jio and Idea Cellular for comments on the report. Also Read - Reliance Jio launches Rs 333, Rs 583, Rs 783 prepaid plans with 3 months Disney+ Hotstar subscription

According to the industry experts, Vodafone s reported plans could initiate the second round of consolidation in the industry. Smaller companies like Telenor could be looking out for mergers. We have already seen Aircel merging with Reliance Communications, which has itself merged with Reliance Jio. If the trend continues, we could see fewer telecom players in the country with larger user bases. ALSO READ: Reliance Jio effect: Vodafone joins Airtel and Idea to offer free voice calls

As far as Vodafone is concerned, it may find itself with fewer options for a merger. Considering that Jio is focusing on acquiring smaller players, Vodafone may look towards Idea Cellular. It is very unlikely for Mukesh Ambani to go for merger with Vodafone India because it is not (in) his DNA to write large cheques; his strategy is different. Birla group could likely be the one and the companies could opt for share swap. The conditions for that would be that Vodafone, as it is unlisted, will need to get valuation done and receive permission from Competition Commission of India, LiveMint quotes an industry executive as saying.

With two decades of existence and almost a decade of being national operator, it is not too soon to expect merger for Vodafone and Idea, the executive further said. Experts also believe Vodafone, which is a big player, could look for a buyout rather than a merger.

Currently, Vodafone is the second-largest telecom player in the country after Airtel. As of September 30, 2016, Vodafone had 19.12 percent market share while the market leader Airtel had 24.76 percent. Idea ranked third with 17.03 percent share. Interestingly, parent Vodafone had invested about Rs 47,700 crore in its India unit, but the majority of the money was spent to clear the debt. In November, Vodafone had slashed valuation of its India unit by 5 billion blaming intense competition. The company also deferred its plans to launch an IPO in India.

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  • Published Date: January 9, 2017 4:00 PM IST

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