Vodafone Group sees Mukesh Ambani-led Reliance Jio as a formidable adversary in India’s fiercely competitive telecom market, which has forced the telecom group to cut the value of its India unit by Rs 36,448 crore.
According to an Economic Times report, Vodafone Plc chief executive Vittorio Colao has asked business heads of the Indian unit to leave no stone unturned in combating Reliance Jio ahead of its proposed merger with Aditya Birla Group-led Idea Cellular.
Vodafone and the Aditya Birla Group had last month confirmed that they were in talks to merge Vodafone India and Idea in an all-share deal. The deal would create the country’s biggest telecom operator by users and revenue market share.
Colao reportedly told Indian executives that the proposed combined entity would be a co-managed company.
Vodafone already has equally owned JVs with Liberty Global and Hutchison in the Netherlands and Australia, respectively. It now plans to have a similar joint venture in India.
The chief executive expects a satisfactory conclusion to the merger with Idea Cellular, which is likely to take around 12-15 months to complete. It requires approvals from the telecom department, Competition Commission of India and three courts.
Colao told the Indian executives that a new chief executive officer of the proposed merged entity would be named a few months before the conclusion of the merger.
The proposed merger of Vodafone and Idea Cellular will create a telco with 35% network capacity share in the country, surpassing Reliance Jio, which would have 31% network capacity share, according to Credit Suisse. It, however, added that the Mukesh Ambani-led telco would continue to lead in the capacity proportion of data networks “by virtue of its large data spectrum holdings and exclusive 4G deployment.”
Both the firms have reportedly appointed consultancy firms EY and Deloitte, respectively, to conduct due diligence for the proposed merger. Credit Suisse report also noted that there would be an imbalance in the combined entity’s revenue market share (RMS) and network capacity share.