Vodafone Group Plc confirmed today that it was in discussions for a possible merger of its Indian subsidiary with rival telecom company Idea Cellular, whose shares spiked nearly 30 per cent.
In a short statement, Vodafone said it was in talks with Idea’s parent, conglomerate Aditya Birla. It said the merger would involve Idea issuing new shares to Vodafone and result in Vodafone de-consolidating Vodafone India.
According to analysts at Berenberg, a combined Vodafone-Idea group would have around 375 million subscribers and around a 36% market share, well ahead of Bharti which has around 260 million subscribers.
Vodafone Group was responding to the recent media speculation regarding a potential combination of Vodafone India and Idea Cellular. The statement didn’t divulge whether the two companies were in exclusive negotiations or the time period of the negotiations.
Airtel is India’s top operator based on subscribers, with Vodafone and Airtel ranked second and third, with around 200 million and 177 million customers respectively. With Airtel’s subscriber base estimated at 258 million, a merged entity would topple it to take the number one stop.
India’s top telecos have been put under pressure by challenger Reliance Jio and its aggressive 4G strategy. The upstart, which is funded by India’s richest man Mukesh Ambani, introduced a series of low-cost offerings last November that will price data as little as 50 INR ($0.75) per gigabyte and $2.22 per month.