Vodafone-Idea Cellular Merged Entity Will Pose a Serious Threat to Bharti Airtel

The Indian telecom industry is currently going through some insane changes, both in terms of tariff plans and marketing, everything has changed after the commercial launch of Reliance Jio. Yes, the brainchild of Mukesh Ambani has changed the entire scenario of the telecom sector in India and feeling the pressure are country’s top three telecom operators- Bharti Airtel, Vodafone India, and Idea Cellular.

Vodafone Idea

Recently Reliance Jio has crossed 100 million subscriber mark in just 170 days and was also rated as the fastest growing telecom operator across the globe. As of now, Bharti Airtel is the leading telecom operator in India with over 269 million GSM subscribers, which is followed by Indian units of Vodafone and Idea with 205 million and 193 million subscribers.

Last month, Vodafone confirmed that they are in talks with Idea Cellular for a merger in the country and a recent report also claimed that both the companies entered final stages of talks for a possible merger and the merger will soon become official. That said, the merged entity of Vodafone India and Idea Cellular pose a serious threat to India’s leading operator, Bharti Airtel in several scenarios.

If the merger happens between the India’s second and third largest telecom operators, Airtel will be dethroned as the leading telecom operator. To be precise, Vodafone India has 206,436,412 customers, whereas Idea Cellular has 192,062,999 consumers as of January 2017 data released by COAI (Cellular Operators Association of India). The combined entity will have nearly 398 million subscribers, and it is almost 50 percent of the market share as India’s total GSM subscribers reached 815 million by the end of January 2017.

Although Airtel is acquiring Indian unit of Norway-based Telenor who currently has over 52 million (52,614,936) customers, it won’t meet the merged entity of Vodafone and Idea in terms of overall subscriber base.

Also, Vodafone has a strong presence in the urban regions of the country, whereas Idea has a huge base in the rural markets. So, the merged entity will have a strong presence in both the urban and rural areas. Airtel has a relatively strong presence in the urban and has the best infrastructure among the private telcos. However, it is worth noting that Airtel has a comparatively less presence in rural areas, but the company is driving deeper into the rural areas as well after the entrance of Reliance Jio.

vodafone-india-4G

Today, Airtel became the second operator in India after Jio to offer pan-India 4G services in all the circles. That said, Airtel is currently offering 4G services in all the 22 circles of India, whereas Vodafone India covers 17 circles and Idea Cellular has 4G operations in 10 circles of India. Vodafone India promised to expand the service to 2400 more towns by the end of March 2017, whereas Idea is aiming to expand 4G footprint to 17 circles by the end of this month.

“We believe the merger would also create significant opportunities for CapEx savings by eliminating duplicate network investments and avoiding future spectrum auctions, given the combined entity should have sufficient spectrum portfolio to expand 3G/4G services across 22 Indian regional markets — or ‘circles’,” says a note issued by Fitch Ratings Ltd on the proposed tie-up last month.

That said, the merger will possibly allow both the operators to reach a wider audience across the country and will also result in better data and voice services than Airtel. Analysts also claim that the competition in the market will be reduced a lot if the merger happens.

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45 Comments on "Vodafone-Idea Cellular Merged Entity Will Pose a Serious Threat to Bharti Airtel"

 

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Ansar Shaikh
July 17, 2017 9:51 pm 9:51 PM

Airtel is leader in the show , and defiantly airtel is doing very fast in terms of 4G coverage. no doubt idea and Vodafone will threat to airtel and well as Jio .

the will start 4G 2X then airtel

[…] With this deal, Airtel is further looking to deliver high-speed 4G data services in the country. With this move, the company is already seeking to tackle the merged entity of Vodafone and Idea. […]

[…] for a possible merger and has already entered final stages of discussions with the latter. The Vodafone-Idea merged entity would dethrone Bharti Airtel as the leading operator in India and will also hurt in terms of […]

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