The Competition Commission of India approved the planned merger between Vodafone India and Idea Cellular, paving the way for the deal to be completed by the end of next year.
Quoting comments from Shardul Amarchand Mangaldas and Co, the legal firm representing Vodafone in the deal, The Economic Times said the approval was a “welcome development” for the Indian M&A landscape and would encourage investment into the sector.
Clearance by the competition regulator is the first of a number of official hurdles that need to be cleared before the merger can be completed.
Combining the customer-bases of Idea and Vodafone will create a new market leader by connections in the country. The company will have a base of nearly 400 million subscribers and a 37 per cent market share, overtaking long-time leader Bharti Airtel.
Speaking following the initial announcement of the deal between Vodafone Group and Idea Cellular owner Aditya Birla Group in March, Vodafone Group CEO Vittorio Colao said merging operations would increase both companies abilities to compete in a tough market.
During last week’s Vodafone Group trading update, Colao said the situation in India was now beginning to “settle” after a turbulent period where Vodafone was forced to write down the value of its unit in the country amid a fierce price war sparked by the entry of newcomer Reliance Jio in September 2016.
Jio’s frequent free and discount offers have led to other operators bringing cases to Telecoms Regulatory Authority of India to complain about its tactics and demand minimum pricing policies are adopted.
Jio responded with its own accusation that rivals made $15 billion by inflating prices. In addition to its cut price tariffs, Jio announced last week it was set to launch a discount handset in a bid to further expand its customer-base.