Vodafone India and Idea Cellular are close to finalising a £21 billion merger, with a deal tipped to be announced this week, The Telegraph said.
Sources in the financial industry told the newspaper the talks had reached an advanced stage, with the likely outcome resulting in an equal partnership. The companies are estimated to have a similar value.
Following the deal the merged company would be India’s largest operator by connections. Once the final details have been announced, the agreement would have to be approved by the country’s regulators.
During February, reports in The Economic Times said merging the existing assets of the two companies would breach government caps on spectrum holdings and subscriber market share in some regions. The country’s M&A rules state no one operator can hold more than 25 per cent of spectrum in an area or 50 per cent in any one band in each service region.
Companies must also stay below a 50 percent market share in terms of revenue and subscribers in every region.
Vodafone confirmed formal talks on merging the unit in January, following an intense price war in the country sparked by the entry of Reliance Jio. Jio’s free data deals resulted in India’s largest operators slashing their data prices.
Although the new entrant has now announced it will start charging for its services, analysts predict if the country’s other operators attempt to match its premium tariff they face a potential revenue hit of 50 per cent from the highest tier customers.