Vodafone India, Idea Cellular merger talks confirmed - Mobile World Live

Vodafone India, Idea Cellular merger talks confirmed

30 JAN 2017

Vodafone Group confirmed it is in talks to merge its Indian business with local rival Idea Cellular in a deal which could create a new market leader and fend off increased competition in the market.

Following ongoing media speculation linking Vodafone India, the country’s second largest player, with a possible merger, the operator issued a brief statement confirming discussions with the Aditya Birla Group, which owns number three player Idea Cellular.

Talks involve an all share merger (excluding Vodafone’s 42 per cent stake in Indus Towers), and any deal would result in Idea issuing new shares to Vodafone.

However, Vodafone noted there is no certainty any transaction will be agreed, and offered no details about timings or indeed terms.

Response to Jio entrance
Vodafone India, Idea and market leader Bharti Airtel have been hit hard by the entrance of newcomer Reliance Jio Infocomm, with the operator causing a big splash by offering free voice and low cost data to the Indian market.

The company, owned by Indian billionaire Mukesh Ambani, effectively caused a price war and led the country’s other leading operators to reconsider their own price plans and strategies. Bharti Airtel blamed the price war for a 3 per cent year-on-year drop in revenue in its fiscal Q3 (calendar Q4) to INR233 billion ($3.4 billion).

Along with Idea, Vodafone India was also linked with a merger with Jio by the UK’s Telegraph newspaper at the start of the year, as it looks to turn around its fortunes in the cut-throat mobile market.

Jio and Idea were also thought to be considering their own merger before this latest development.

Vodafone injected more than $7 billion into its Indian unit in 2016, in a move that reduced its debt by half and gave it capital to invest in the country’s big 4G auction. It was the top spender, making a INR203 billion commitment to expand its 4G coverage.

In November, Vodafone said it was planning to spin off the unit, once market conditions became more favourable.

Airtel already made its own move to consolidate, and is reportedly close to securing a deal to acquire Telenor’s Indian subsidiary.

GSMA Intelligence predicts Vodafone India’s subscriber base will top 209 million connections by end Q1 2017 and Idea’s base will exceed 188 million. Current leader Airtel is forecast to have more than 267 million.


Kavit Majithia

Kavit joined Mobile World Live in May 2015 as Content Editor. He started his journalism career at the Press Association before joining Euromoney’s graduate scheme in April 2010. Read More >>

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