In recent industry news, Vodafone has confirmed rumours that they are discussing a possible merger with Idea Cellular, one of their rival telecommunications companies in India. If done right, the newly-emerged entity stands a chance to become the biggest telecommunications operator in India.
Idea’s shares spiked almost 30%.
Currently, it is unknown whether any transaction will be agreed upon, and the same can be said about the timing and the terms of any such transaction.
If the merger goes through, the newly-emerged entity would dethrone the Sunil Mittal-owned Bharti Airtel in terms of the overall number of subscribers and market share.
Specifically, the combined subscriber count of the new entity would equal almost 39 crore. In comparison, Airtel has 27 crore, and Jio only has 7.2 crore as of right now. The new combined entity would have a 40% market share, which is 8% more than Airtel’s near 32%.
Not only would the combined entity have the strongest retail footprint within the industry, it would also have robust spectrum holdings.
If the deal goes through, this will have an undeniable impact on the $26 billion telecommunications market in India. Reliance Jio is seen as a challenge to Airtel, the currently-ranked #1 telecommunications company in India, but it would be very difficult for them to contest the combined power of Vodafone and Idea.
If nothing else, the emergence of a newly merged entity will disrupt all present calculations. It remains to be seen whether Reliance Jio can withstand its aggression.