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Vodafone to merge Indian business with local rival Idea

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Vodafone to merge Indian business with local rival Idea
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A huge telecoms merger has been announced in India.

Consolidation is a much anticipated and very welcome development in this beleaguered telecom sector

Arpita Pal Agrawal Telecom analyst, PwC India

Britain’s Vodafone is joining with Idea Cellular in a deal worth the equivalent of 21.3 billion euros.

Together they will become India’s biggest telecoms business with almost 400 million customers, overtaking the market leader Bharti Airtel.

The new firm would have about 40 percent of revenue of the world’s second-biggest mobile phone services market by users after China.

Vodafone, which is the world’s second-largest mobile phone operator, will own 45.1 percent of the merged entity.

This is the latest and biggest consolidation in India after the arrival last year of a new company sparked a brutal price war in the cutthroat market.

The newcomer, Reliance Jio Infocomm, has been providing free services on its 4G mobile broadband network for months to establish a customer base.

That has forced India’s three biggest operators – Bharti, Vodafone and Idea – to slash prices and accept lower profits.

Consolidation

Bharti Airtel is in the process of buying Telenor’s India operations, while two smaller players controlled by Malaysia’s Maxis and Russia’s Sistema are merging their operations with Reliance Communications’ wireless unit.

“Consolidation is a much anticipated and very welcome development in this beleaguered telecom sector,” said Arpita Pal Agrawal, a partner and telecom analyst at PwC India.