The merger between UK-based telecom operator, Vodafone India with Idea Cellular, is inching closer and will likely happen as early as March-April next year. According to an article in the ET Telecom, a Bank of America-Merrill Lynch report noted that Idea Cellular management expects all approvals for the merger to come in by March/April 2018.
This is in contrast to Vodafone Group CEO Vittorio Colao’s statement which had suggested September 2018 timeline.
Earlier this year, Vodafone and Idea, which are currently India’s number 2 and 3 agreed to merge their operations to create India’s largest telecom operator with over 400 million customers. The combined operations will be worth $23 billion with 35% market share says ET report.
The merger is crucial for the survival of both firms who have been struggling to take on competition since massive disruption by Jio. With the merger, they hope to dislodge Bharti Airtel and Reliance Jio to counter fierce tariff wars which are causing huge losses to individual firms.
The merger is likely to cut infrastructure in circles where there is overlap to save cost and energy. Combined sites can be cut by more than 20 percent after the deal comes to close, said, experts.
The merger will supposedly bring around $10 billion in saving. They will save $415 million (Rs 2,700) crore of cost savings where both telcos have same 2G gear. A bulk of these savings, however, would come in the second year, post-merger completion. The Idea-Vodafone combined entity will remove overlapping 3G and 4G network gear that would result in sizeable power savings.
Analysts say the firms will start freeing up their 2G/3G airwaves in 1800 MHz and 2100 MHz respectively for 4G deployment. Vodafone-Idea is expected to launch their VoLTE based 4G services in 2019.
However, the US report says Idea-Vodafone merged entity won’t invest in the expensive 4G spectrum in the 700 MHz band for the next couple of years. Instead, they would consolidate their 2G and 3G services instead of 4G. Despite their merger, Idea-Vodafone will not be able to close in their losses since rivals are already acquiring their customers.
