The UK Vodafone mobile carrier appeared in India around 10 years ago and expanded its influence acquiring 67% of Hutchison. As for now, there are 10 mobile telephone companies competing for the market which is considered to be second-largest in the world. Vodafone is number 2 in India surpassed by the largest Indian carrier Bharti Airtel. Idea Cellular Ltd is the third biggest operator for the time being. These number 2 and number 3 companies have officially announced about their merging which will be obviously beneficial both for the companies and their subscribers. Vodafone Idea merger is supposed to be completed in 2018. The merger entity will have more market share than Bharti Airtel. So the newly merged company will have all chances to become the leader in the Indian telecom market. It is expected that they will have almost 400 million users.
Vodafone Idea merger
This step is the reaction to the price war in the telecom service market in India after the new Reliance Jio Infocomm Ltd operator offered free calls and data. Indian subscribers will enjoy a reduction of prices which the operators will have to introduce to compete with each other, even though it will affect their profits.
It is stated that both of the two companies, Vodafone and Idea will have control in the new entity. In the language of figures and shares, Vodafone will sell its 4.9% stake to Idea controlled by Aditya Birla Group and its own stake in the newly merged company will amount to 45.1%.
As analysts say, both of the companies will gain in the merger yet there may be some measures taken to reduce the losses from cutting the tariffs, like decreasing the number of employees which is a common thing in mergers. The companies’ CEOs try to calm down the worries though. It is pointed out that the two companies expect some savings on capital investments and operational expenditures.
This is a venture embracing quite a complex of issues, such as appointing officials, share transfers, business consolidation, meeting tax requirements etc.
Telecom sales specialists and analysts see the merger in the positive light and assure that this is a win-win deal for both parties. Hopefully, their expectations will prove and the two companies as well as their customers will witness changes for the better.