A merger with Idea Cellular would be the best bet for Vodafone India, and would also allow the current second and third largest telcos to dethrone Bharti Airtel in revenue market share and create a new leader in the Indian telecom landscape, brokerage firm CLSA said in a recent report.

  • Make Telecom Talk My Trusted Source
  • Source of Google
  • Source of Google

india-vodo

The merger would result in a combined revenue market share of 43 percent, significantly higher than Bharti Airtel’s current share of 33 percent, CLSA said, adding that the merged entity will also have the highest spectrum holding across the industry.

The report said that the merger, if goes through, will be complementary to Vodafone and Idea Cellular’s operational strengths. The merger would also pave the way for a backdoor listing of Vodafone India’s business without going through an IPO process.

The merger, however, could face regulatory challenges, CLSA warned, pointing out that a merger between Vodafone and Idea would breach the revenue market share ceiling in five circles out of the 22 circles.

The existing merger and acquisition (M&A) guidelines in the telecom sector only allows an M&A if the percentage of adjusted gross revenue market share of the merged entity does not exceed 50 percent in any particular circle.

The M&A guidelines also specify that the combined entity should have less than 50 percent of spectrum in each band individually in addition to having less than 25 percent of the spectrum allocated to all operators in all bands in all circles.