Finally, the biggest merger in the recent past is here. Idea Cellular and Vodafone have finally crossed the last regulatory hurdle successfully to merge their operations in India, thus paving the way for the creation of a new market leader in this highly competitive country.
Vodafone, even if being the world’s second-biggest mobile operator, entered India in 2007, and had successfully created its fanbase, in spite of the struggle attached to its inception due to extremely low pricing and a long-running tax battle.
The two groups have announced this deal in March last to create something big, with a customer base of around 400 million customers, thus overtaking Bharti Airtel and thus accounting for about 40 percent of revenue in the market. In addition, this entity’s board would have 12 directors, with Kumar Mangalam Birla as chairman and Balesh Sharma as the chief executive officer. Also, Himanshu Kapania has stepped down as managing director of Idea Cellular but will continue as a non-executive director on the merged entity’s board.
The deal is a clear indication of how India’s mobile industry, which is the world’s second-biggest market by users after China, has been transformed by the launch of Reliance Jio Infocomm’s 4G mobile broadband network.
Now, built at a cost of at least more than $20 billion by India’s richest man Mukesh Ambani, Jio has now almost forced India’s three biggest telcos, Bharti Airtel, Vodafone, and Idea, to cut down prices and accept lower profits, as a mark of consolidation.