India’s Department of Telecommunications (DoT) has approved the merger of Vodafone India and Idea Cellular.
Vodafone India is India’s second largest telecom operator based on wireless subscriber base. Idea Cellular is India’s third largest mobile operator based on the number of mobile phone users in the country.
Kumar Mangalam Birla-promoted Idea Cellular, which could not compete with Mukesh Ambani’s Reliance Jio and Sunil Mittal’s Bharti Airtel, was forced to opt for a merger with UK-based Vodafone Group to sustain in the Indian telecom market.
Both Vodafone and Idea Cellular could not enhance market share in line with the growth in the country. Both did not do well in the 4G market as well. Reliance Jio is dominating the 4G market in India at present with nearly 200 million customers.
Market share suffers
Idea Cellular has increased its market share to 18.94 percent in May 2018 from 16.62 percent in May 2017.
Vodafone has increased its market share to 19.67 percent in May 2018 from 17.86 percent in May 2017.
On the other hand, Airtel has enhanced its market share to 30.46 percent from 23.59 percent in 12 months.
Reliance Jio has enhanced its market share to 18.17 percent from 9.94 percent. But Reliance Jio has several in-active subscribers, according to TRAI data.
BSNL has enhanced its market share to 9.98 percent from 8.74 percent. BSNL does not have presence in Mumbai and Delhi telecom circles.
The new Vodafone Idea will have 38.61 percent share of the Indian telecom market as against Reliance Jio’s 18.17 percent and Airtel India’s 30.46 percent. Airtel grew its mobile phone subscribers in a big way thanks to a series of acquisitions — becoming the leader during the consolidation drive.
DoT gave the final approval after the companies paid Rs 3,900 crore in cash and Rs 3,300 crore in bank guarantees towards one-time spectrum charges, LiveMint reported.
Vodafone Idea will now have to apply to the Registrar of Companies for registration of the merged entity.
While Rs 3,900 crore cash is for transfer of spectrum from Vodafone to Idea for spectrum up to 4.4 MHz, the bank guarantee of Rs 3,300 crore is for Idea Cellular’s airwaves beyond 4.4 MHz.
Vodafone India has appointed Kumar Mangalam Birla as the non-executive chairman and Balesh Sharma as the next chief executive officer.