Vodafone said its share in Indus Tower will not be included in a deal
UK mobile telecommunications group Vodafone confirmed it is negotiating about potentially merging its Indian business with rival mobile operator Idea Cellular.
Vodafone issued a brief statement in which the telco said it is in discussions with Idea Cellular’s parent Aditya Birla Group about an all-share transaction with the telco.
“Any merger would be effected through the issue of new shares in Idea to Vodafone,” reps for the telecom group said. The deal would also see Vodafone India de-consolidated from the group.
Vodafone’s 42% stake in cell tower firm Indus Towers – a company in which Idea and rival Bharti Airtel also hold shares – would not be included in any merger with Idea, the company said.
A future merger between Vodafone and Idea would create a new market leader in India, with approximately 387 million mobile customers, according to figures from the Telecom Regulatory Authority of India (TRAI). The Indian mobile telephony market is currently dominated Bharti Airtel, with 262 million subscribers.
The combined entity would likely have to divest assets, including spectrum, in order to comply with local regulations, which stipulates that a single operator can’t have more than a 50% share of subscribers and revenue in a determined telecom service area. Local mobile operators are also limited to accumulating no more than 25% of available spectrum nationwide.
The Indian mobile telephony market is currently experiencing a price war due to the aggressive market strategy implemented by new entrant Reliance Jio Infocomm. The telco has been offering nationwide voice and 4G data since September 2016. This offer forced rival companies to drastically cut prices in order to remain competitive.
Reliance Jio is expected to continue offering free voice and data until at least the end of March, after which it would introduce a monthly fee for data.
Idea Cellular launches 4G in nine additional circles
In related news, Idea Cellular announced plans to launch 4G services in nine additional circles and 3G services in two circles – Bihar and Rajasthan – by March 2017.
Over the last year, the telco has more than doubled the coverage of its mobile broadband (3G/4G) network, which now covers nearly 500 million people across 100,000 towns and villages.
Idea currently offers 4G LTE technology in eleven circles, whilst 3G services are available in 21 circles.
The telco is also having talks with Ericsson and Nokia regarding the deployment of VoLTE technology, which is expected to be launched during this year.
