Vodafone has today confirmed that it is in discussions with Aditya Birla Group for a possible merger. If it's done, it will create the largest telecom company with revenues over Rs 80000 crore. Earlier we have reported the matter about the possible merger.This comes amidst the entry of Reliance Jio wherein it is offering free voice and data to the consumers as a Happy NewYear offer which will be until March 2017. As a result, there has been a giant surge in the subscriber base of Reliance Jio reaching a Whopping 72.4 million subscribers in just 4 months since its inception in September.
"Vodafone confirms that it is in discussions with the Aditya Birla Group about an all-share merger of Vodafone India (excluding Vodafone's 42% stake in Indus Towers) and Idea. Any merger would be effected through the issue of new shares in Idea to Vodafone and would result in Vodafone deconsolidating Vodafone India," Vodafone said in a statement.
According to brokerage firm CLSA, the combined group will have 43 percent revenue market share and 40 percent active subscriber market share If the merger takes place it will form the Indias largest telecom player both in revenue and subscribers and takes it past Reliance Jio and Bharathi Airtel. TRAI Chairman JS Khullar told that in order for the merger to take place it needs a clearance from Competition commission of India (CCI).
Vodafone has a greater subscriber base in the metros whereas Idea turns out to be the major player in rural areas. However both the companies needed to cross regulatory hurdles before the merger. According to M&A norms, the combined revenue market share should not exceed 50 percent in any circle. Also, spectrum holding must not exceed 25 percent across all bands and 50 percent in each band individually.
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