To take on Reliance Jio, Vodafone-Idea initiate merger talks

A merger between the two companies will take the combined entity to the number one position in India in terms of subscribers at 387 million.

Telecom giant Vodafone said it was in talks with Idea for merging its Indian units. This merger will form India’s biggest telecom firm. Also merger will stand against Reliance Jio in the market.

“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,” Vodafone said in a statement.

A merger between the two companies will take the combined entity to the number one position in India in terms of subscribers at 387 million. Reliance has already registered 72 million customers by offering free services till March this year. With a merger, Vodafone-Idea combined would have a 43 per cent revenue market share.

Telecom firms in India are seeking to consolidate after Reliance Jio Infocomm Ltd., controlled by billionaire Mukesh Ambani, India’s richest man, introduced free services undermining industry revenue. Earlier on December 4th, 2016, Mukesh Ambani announced several services including free voice calling and data till March 31, 2017 to counter opponents in the market

“The merger would help Vodafone India improve its positioning in the mass-market, while Idea Cellular would gain from Vodafone’s strength in metro circles. Not only would the combined entity become the industry leader but also a strong competitor in the data market with 3G spectrum across India and the highest 4G spectrum in the 1800MHz band, enabling sufficient capacity spectrum,” global brokerage firm, CLSA said in a report dated January 18th.

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