After obtaining the final nod from the Department of Telecommunications, Idea Cellular and Vodafone India will merge to form the biggest telco of the country – Vodafone Idea Ltd. After the merger, Vodafone India will cease to exist, and the assets and liabilities of the firm will be transferred to Idea Cellular. In this regard, Telecom Commission, the highest decision-making body in the Indian telecom industry has said that the consolidation of two big companies will bring stability to the sector.
Telecom Secretary, Aruna Sundararajan said to PTI that “We expect that with this merger, the market will begin to stabilise. We expect to see robust growth in the telecom sector with the emergence of three strong private sector players, and one public sector player.”
It is noteworthy that the Vodafone Idea merger was slated to be finalised by June end, however, owing to the demands raised by DoT for bank guarantees worth Rs 7,268 crore the merger was stalled. Now, both the telcos have agreed to the demands of DoT ‘under protest’ which has resulted in the finalisation of the long-awaited and the most prominent M&A in the industry right now.
Concerns regarding monopolisation and cartelisation have also surfaced after the merger. To these doubts, telecom secretary pointed out that in markets like the USA, three players have long served the consumers and even maintained stability. She said “This is a long-awaited merger and also a big milestone in the history of mergers in the country. Each player is a strong corporate, and I believe there will be more than enough competition, and good news for consumers.” She further added that it would be in the best interest of the industry if the companies are engaged and continue to offer different services to their customers, setting themselves apart.
Notably, this merger will forge the largest telecom entity in India with 35% market share and as much as 430 million subscribers. The company will surpass Bharti Airtel which stands with a massive 344 million customers now. The merged company will also be in a better position to handle competition in the sector, especially kicked off by Reliance Jio.