India will soon witness a brand-new entrant as the No.1 player in the Telecom Space!
After Department of Telecommunications (DoT) giving its final approval to a Vodafone India and Idea Cellular merger, the newly merged unit is all set to put the kibosh on Bharti Airtel’s legacy.
This is a significant development after the merger met the stone wall, when the department demanded ₹3,900 crore in cash and ₹3,300 crore in bank guarantees from the duo, as one-time spectrum charges which were mandatory for payment, as part of the merger and acquisition guidelines.
Vodafone Idea Ltd Brings Down Bharti Airtel
Lest you’ve been dwelling under a rock, here’s a quick ride along the merger road!
Vodafone and Idea decided to merge their business, following a huge tariff war and a reduction in margins in the telecom space. This was induced in the recent past, with an entry of the Ambani led Telecom Firm, Reliance Jio.
The approval creates a new entity, Vodafone Idea Ltd, and is in close competition with Mukesh Ambani’s Reliance Jio Infocomm Ltd. Jio has dwindled the revenue stream of existing incumbents in the telecom space, since its very inception in 2016. The long, over-due merger between Vodafone and Idea, will usher in some amount of stability, if not more!
The merged unit, as of now, will have to apply at the Registrar of Companies, in order to register Vodafone Idea Ltd. After the registration, DoT must transfer licenses of both the operators.
Substantially, the nod from DoT comes along with an inventive stage set. Vodafone Idea Ltd. has to go for the combined effort in order to sustain existing pressure from Jio. The merged entity will be able to roll out faster data, given the fact that it has a large spectrum spared for it to utilize.
Idea and Vodafone, In An Individual Ape Up!
Idea Cellular has kept up its pace of being an ever-growing telecom operator in the Indian Landscape and has achieved it due to the well-established network of over 1,000 cell sites. These cell sites know the ropes to provide seamless 2G and 3G coverage to about 8 lakh customers. Reported in 2016, the company set up nearly 160 cell sites and continues to enhance coverage areas, ever since. As per the data, Idea witnessed the highest growth in Revenue Market Share wherein it grew by 1.5 percentage point in the first quarter of FY16
As of May 2018, Vodafone has 223.5 million mobile subscribers in India alone. While Idea has 214 million mobile subscribers in India. Now, with the Vodafone-Idea deal being sealed, the approved merger can mark good times amidst bells and whistles. The resultant entity – Vodafone Idea Ltd. – will have over 436 million subscribers, overtaking Bharti Airtel’s 344.6 million mobile subscribers in India.
As per reports, Airtel and Reliance Jio are up for grabs by investing about Rs 3 billion to 4 billion USD on infrastructure. However, the recent combined debt of Idea Vodafone Ltd. has been an added burden and hence, they are most likely to invest about 2 billion USD for the upcoming two years, if not more.