Idea Cellular has accepted a merger with Vodafone India to form a merged entity that will become India’s leading telecom operator. Number wise, the combined entity of Vodafone-Idea will have somewhere close to 400 million subscribers. Whereas Bharti Airtel, the current leading telecom operator will end up having close to 320 million customers, including Telenor user base.
While the deal was pretty much expected owing to the significant disruption caused by the Mukesh Ambani-led Reliance Jio, the major question here is that how will the merger benefit customers.
Well, according to the analysts, there seems to be a good number of advantages for users under the merged entity.
The first benefit will be the reach of wider audience. It is already a known fact that Vodafone India has a strong presence in the urban regions of the country, whereas Idea has a huge base in the rural markets. Now that the merger is happening, the joint entity will have a stronger presence in both the urban and rural areas. Both Idea and Vodafone are pretty much confident in this aspect as both of them combinedly will reach a wider audience than that of their rivals.
With the entrance of Reliance Jio, the tariff plans segment has seen a stiff competition with all the major players offering affordable plans. After Vodafone and Idea’s merger, the competition in the market may decrease, but analysts claim that the new entity will go neck-on-neck with Reliance Jio in the price segment and that’s a huge benefit as Indian consumers have always been cost centric.
And the third benefit with the merged entity will be the improved services. Yes, along with the wider audience reach, we can expect the company to improve the service quality drastically.
Also, a regulatory of India states that the merger and acquisition should not own more than 50 percent of the spectrum in any band and any circle. So, Vodafone or Idea has to hand over the spectrum or sell the spectrum for cheaper rates in at least five circles in the country. With a balanced infrastructure, the entity will deliver better services and customer support.
Furthermore, the merged entity can help the Government of India’s Digital India program by deploying wireless broadband networks across the whole country. “Highly complementary combination will create India’s largest telecoms operator with the country’s widest mobile network and a strong commitment to delivering the Indian government’s ‘Digital India’ vision,” says the companies in a statement.
