Vodafone India, the country’s second largest mobile operator, is reportedly considering merging with either new entrant Reliance Jio or number three Idea Cellular to turn around its fortunes in the face of increased competition after the launch of 4G services by the newcomer.
According to The Telegraph, Vodafone is “weighing a potential merger of its Indian arm with rivals as it seeks a turnaround in the subcontinent’s cut-throat mobile market”.
However, the newspaper noted that Jio and Idea could possibly merge their operations.
Vodafone injected more than $7 billion into its India subsidiary in September, reducing its debt by half and preparing it for an auction in October. Vodafone India, with a 19 per cent market share, was the top bidder spending INR203 billion ($2.9 billion) to expand its 4G coverage to 17 regions to close the gap on market leader Bharti Airtel and Jio.
In November, Vodafone said it plans to proceed with an IPO of its Indian unit “as soon as market conditions allow”, although it does not expect this to take place during the current financial year ending 31 March.
The county’s top three mobile operators all have launched free voice plans or expanded prepaid 4G data allotments in response to Jio’s generous free offers. In December Jio extended its free voice, data and video offer from the end of 2016 to end-March as part of a new year offer.
With competition intensifying, operators are looking to consolidate. Airtel is reportedly looking to acquire Telenor’s India unit for $350 million in a deal that could close by the end of this month.
In September the country’s fourth largest operator Reliance Communications (RCom) and smaller rival Aircel signed definitive documents paving the way for “the largest-ever consolidation in the Indian telecom sector”. The combination will create the country’s third largest operator.