India’s telecoms industry is the midst of a shake-up as Vodafone India confirms it is acquiring Idea Cellular.
Together the two companies will create India’s largest operator with around 400m customers and 35 percent of the market share.
Though the deal has been painted as a merger, it is more of an acquisition.
Vodafone is set to own 45.1 percent of the combined company and the Aditya Birla Group, which owns Idea Cellular, will have a 26 percent stake. Over the next few years ABG will scale up its ownership of shares, however, if this is not equal to Vodafone after four years, Vodafone will sell down its own shares so that the two companies are on an equal footing.
Vodafone Group’s chief executive Vittorio Colao said:
“The combined company will have the scale required to ensure sustainable consumer choice in a competitive market and to expand new technologies – such as mobile money services – that have the potential to transform daily life for every Indian.”
The new combined company will be subject to sustained investment to deliver the Indian government’s ‘Digital India’ vision. As the entity will have the country’s widest mobile network, it is in a great position to expand wireless broad band services using 4G, and 5G technology in the future, as well as supporting the introduction of digital content and Internet of Things (IoT) services.
In addition, it will seek to expand financial inclusion through mobile money services for the benefit of Indian consumers across the whole of the country.
Now that Vodafone-Idea has combined, it will overtake India’s former number one telecos brand, Airtel. Airtel is in the midst of negotiating a merger with Telnor India, which will bring its numbers up to over 300m supporters. This is part of the industry’s attempts to beat off Reliance Jio, a new operator owned by India’s richest man Mukesh Ambani.
India is a huge market for mobiles – with around 1bn of the world’s mobile users residing in the country, the second largest smartphone market.
The mobile industry makes up around 6.5 percent of India’s GDP and employs around 2.2m people, which is set to grow to 3m direct jobs in 2020 according to GSMA Intelligence.