Idea & Vodafone are Merging to Tackle Reliance Jio

A lot has been happening in India’s telecom industry since Mukesh Ambani launched Jio, India’s largest 4G network. While every telecom industry is fighting a “Telecom War”, The United Kingdom based telecommunications company, Vodafone is all set to merge with Indian based telecom company Idea. Both companies Idea and Vodafone have decent share of Indian telecom market and

Both companies Idea and Vodafone have a decent share of Indian telecom market and upon the merger, Idea-Vodafone will become the biggest Indian telecom company in terms of users as well as revenues.

The Role of Reliance Jio

Jio, Mukesh Ambani’s largest 4G service has launched an intense price war. Jio has provided free services to the users and has upset the bigger players in the market. Airtel, Vodafone, Idea, as well as the government-run BSNL, have slashed their prices many folds to compete with Reliance jio. The Vodafone-Idea merger is definitely going to have more resources which as a result would turn into messier price wars between the telecom companies.

The merger between Idea and Vodafone will beat all Indian telecom companies including Jio and Airtel. The Vodafone-Idea merger is definitely going to have more resources which as a result would turn into messier price wars between the telecom companies.

Vodafone-Idea Merger Details

UK based group Vodafone is a dominant partner with 45.1% stake. Vodafone will be transferring 4.9% of the stake to Aditya Birla Group for Rs. 3874 crore.

Aditya Birla Group will then be owning 26% stake in the company and will have a right to acquire more shares from Vodafone.

Kumar Mangalam Birla will be appointed as the new chairman of the Vodafone-Idea merger entity.

It is expected that the merged company would have almost 400 million customers in India and is expected to become the largest telecom operator in India. .

Vodafone-Idea merger will have 35% customer share and also 41% revenue market share.

The Vodafone-Idea merge is expected to take place during the 2018 calendar year. However, the name of the merged company and the brand strategy will be decided later. The Vodafone-Idea merger will be focusing on providing a better service quality and a better customer experience. Vodafone-Idea merger will have reduced financial challenges.

Some More Things You Should Know About The Merger

Vodafone and Idea will be selling off their standalone tower assets.
Idea and Vodafone both have stakes in Indus Towers, 11.15% and 42% respectively.
The ongoing tax dispute will not affect the Vodafone-Idea merger.
Till the merger is completed, Vodafone and Idea will be operating separately.
Vodafone will be appointing a new chief financial officer for merged entity.
After the Vodafone-Idea merger, there will only be three big companies in India which as a result would lead to bigger revenues less competition.
Jio, India’s largest 4G network company will be facing a stiff fight.

After Idea and Vodafone will combine to become one company, then the Indian telecom sector will have 3 major players – Reliance Jio, Airtel and Idea-Vodafone who will compete against each other in India.

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