Vodafone India and Idea Cellular, which plan to merge their operations, together lost 3.7 million customers in July, which analysts say is part of an effort to let go of low-ARPU customers in regions where their combined market share is more than 50 per cent, The Economic Times (ET) reported.
India’s telecoms M&A regulations limit a company’s subscriber market share and revenue market share from exceeding 50 per cent in any service region.
Vodafone, India’s second largest mobile operator, lost about 1.4 million mobile subscribers in July, while number three Idea shed 2.3 million, according to data from the Cellular Operators Association of India (COAI).
The two operators have market shares well above 50 per cent in a number of service regions, including Maharashtra, Gujarat, Haryana, Madhya Pradesh, Uttar Pradesh West and West Bengal, ET reported. COAI’s July subscriber figures show the two operators lost nearly 1.4 million customers in these six regions alone. India has 22 service areas.
Nitin Soni, a director at Fitch Ratings, told ET: “Both Vodafone India and Idea appear to be letting go of low-ARPU customers in markets where their combined subscriber market share is well above the 50 per cent permissible limit for telecom M&As.”
This view was support by Mayuresh Joshi, telecoms analyst at Angel Broking, ET reported.
The merger between Vodafone and Idea moved a step closer in early August after it received conditional approval from the country’s securities watchdog. The $23.2 billion merger must be granted final approval by both operators’ shareholders, along with a number of other regulatory hurdles.
Vodafone Group and Idea’s parent Aditya Birla Group are looking to complete the deal during 2018. It will create India’s largest wireless operator with a combined subscriber base of around 425 million connections and a 35 per cent market share, according to GSMA Intelligence estimates for Q1 2018.