Monday, 30 January 2017

Vodafone, Idea Cellular in merger talks to take on Reliance Jio

Vodafone has confirmed that it is in merger talks with rival Idea Cellular. Multiple reports in the past couple of days have been hinting about the merger talks, but the speculation can now be put to rest. 

London based Vodafone Group Plsc has released a press statement confirming that it is in talks to merge its Indian arm with Aditya Birla Group's Idea Cellular for an all-share deal to tackle the fierce competition in the market triggered by Mukesh Ambani's Reliance Jio.

The company further mentioned that any merger would be effected through the issue of new shares in Idea to Vodafone, resulting in Vodafone deconsolidating its Indian business. However, Vodafone says, the merger talks will exclude the company's 42 percent stake in Indus Towers, India's biggest telecom tower company. 

If the deal goes through, the merged identity (Vodafone and Idea Cellular) will become the country's biggest telecom operator in terms of  market share (43 percent) and subscribers. Currently Airtel is the country's largest telecom operator, with a 33 pecent share of the market, while Reliance Jio is rapidly rising and has 13 percent stake, that it achieved within six months of commencing commercial operation.

Vodafone has been caught in the crossfire of telecom wars initiated by the arrival of Reliance Jio, which has shaken up the telecom market by offering free voice and data to customers. Apart from Vodafone, other telecom operators like Airtel, BSNL and Aircel have also been taking the heat, and have launched a number unlimited calling and bundled data plans to keep their customers at bay. 


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