The British telecom company Vodafone Group Plc today confirmed that it is holding talks for a possible merger with the strong provider Idea for a merger with its Indian subsidiary. Once a rival, if the two network operators merge, it will possibly pose a threat to the two big operators, namely Airtel and Jio.
The statement read that Vodafone “confirms that it is in discussions with the Aditya Birla Group about an all-share merger of Vodafone India (excluding Vodafone’s 42 per cent stake in Indus Towers) and Idea. Any merger would be effected through the issue of new shares in Idea to Vodafone and would result in Vodafone deconsolidating Vodafone India.”
However, the company also said that there is no certainty about a transaction or a timing for the deal, but the talks are being held. If Vodafone and Idea merge, the combined number of subscribers will topple Airtel to take the number one position with a current count of about 39 crores while Airtel has about 27 crore subscribers. Reliance Jio, the new player in the market with about six months of operation has garnered about 7.2 crore subscribers. Considering the revenue market share, if the merger goes on to happen successfully, the combined revenue share of Vodafone and Idea will be about 43%, much higher than the 33% share taken by Bharti Airtel.
The deal should be a bigger threat to Airtel than to Jio because ever since Reliance Jio entered the market with the freebies offered, it has not just threatened the other carriers with the growing number of subscribers, but the tariffs announced have made the competitors start reducing the cost for recharges.