Vodafone India is looking for a merger with one of the leading telecom companies following fierce competition from its rivals and in particular Reliance Jio. After the entry of Reliance Jio into the telecom space, the scenario of tariff plans changed completely. Jio's aggressive tariff plans and investments started impacting its rivals. Reliance Jio debuted with Welcome offer offering unlimited calling and data plans to its customers until December 2016 that put tremendous pressure on other players in the market.
Big companies like Airtel and Idea came up with plans to counter the Jio effect. However, it was way too much for small players who have to cut profit margins in order to protect its customer base. After the second announcement made by Mukesh Ambani in December, stating the extension of free offers for three more months until March 2017 as Happy New year offer the situation further worsened.
According to an industry executive, it is highly unlikely to expect a move from Reliance jio Owned Mukesh Ambani and it seems Idea is more likely the company, to opt for the merger. For the merger to take place Vodafone needs to be evaluated and has to receive permission from competition commission of India.
According to sources, some more small companies might follow the path of Vodafone in the future that includes Telenor, are likely to be acquired and middle size companies like Anil Ambani-owned Reliance communications Ltd and Aircel might opt for merger. Vodafone India has 200 million mobile customers at the end of September 2016.Although there has been a rise in subscriber base in the quarter and the data usage also increased 9.8% but recorded 2% decline in voice minutes.
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