The third largest carrier in the country Idea Cellular has refuted the news that it was in talks with Vodafone India for a merger. According to CNBC TV 18 report, a spokeswoman for Idea’s parent company Aditya Birla group called it false and denied reports that it was in exploratory talks with rival Vodafone India for its merger. Experts also feel that such a merger is unlikely and could face tough regulatory scrutiny which stipulates that any merger must not constitute more than 50% of the revenue share in any market segment in the country. The deal will face tough regulatory hurdles for any such spectrum sharing deals. There are reports that Idea Cellular and Vodafone India are in preliminary talks about a possible merger, and if this strategic move does come about, it could create the biggest telecom company in the country in terms of market share.
Vodafone has declined to comment on the story while Idea Cellular termed the report as baseless and false. The CNBC had earlier reported that the two telecom giants are talking about a possible merger. Vodafone is talking about an IPO worth $11 billion, while Idea Cellular has been valued at $5 billion. If they merge, it will create a corporate entity worth $16 billion to become the biggest telecom company. In this case, Vodafone India will not have to issue any IPO because Idea is already listed.
The last two years have been tough for all telecom operators and with the entry of Reliance Jio, the competition will become keener. The process must not have started abruptly since both are robust players in the field of telecom. Both companies must have done a lot of homework circle-by-circle to figure out the likely impact of the merger.
Vodafone is not new to the merger strategy and in the past, it has been in merger talks with other companies as well, such as Tata Teleservices, but any deal has failed to materialize. The channel has also reported that Vodafone was into merger talks with Idea in the past also. The possibility of merger talks has come at a time when the telecom scene is witnessing one of the keenest war over the entry of a formidable rival in the form of Mukesh Ambani’s Reliance Industry-Jio group.