Vodafone confirms merger talks with Idea on major telco deal

The merger will create an entity with a subscriber base of more than 400 million to emerge as the largest player in India, replacing the current dominant player Bharti Airtel, which currently has over 260 million users on its network. “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,” the Indian entity’s parent company said. 

“Any merger would be effected through the issue of new shares in Idea to Vodafone and would result in Vodafone de-consolidating Vodafone India.” Vodafone India has over 200 million subscribers, with a presence in all the 22 circles the country has been divided into. It intends to have 4G services in 17 circles, covering 2,400 towns, by the end of this fiscal.

Idea, on the other hand, says it has a similar subscriber base, also with a presence in all the 22 circles. It intends to have 4G services in 20 circles by March 2017. Industry speculation over a possible merger has been doing the rounds for nearly a year and intensified after Reliance Jio entered the market with its mega voice and data offer, with an announcement that voice will be free on its network for life. 

But the Aditya Vikram Birla Group had scoffed at media reports suggesting merger talks in their regulatory filings with the stock exchanges, though analysts found a lot of synergies in such a move. Earlier this month, JP Morgan had spoken about the merits of such a merger. 

“This could unlock more than $9 billion in potential synergies and offer an elegant route to de-consolidating India, thereby helping focus (Vodafone’s) attention back onto a rebounding European equity story,” the top investment banker said.

Idea Cellular on Monday forayed into digital services with ‘Digital Idea’ and launched three new mobile apps, Idea Music Lounge, Idea Movie Club and Idea Game Spark. These digital content applications will serve as a one-stop entertainment destination initially for Idea subscribers, providing access to a large collection of popular and premium content.