Idea Cellular, India’s third-largest mobile phone carrier, today strongly denied a news report that it was in exploratory talks for a merger with larger rival Vodafone India.
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It was widely speculated that Mukesh Ambani’s Reliance Industries would try to buy Idea, but Ambani chose to build a modern, all-IP network from scratch instead. Vodafone India added 0.32 million mobile subscribers in the month of July. The Aditya Birla Group firm, for example, is estimated to have several times the total number of 4G towers compared with Vodafone. Vodafone and Idea have also long cooperated in the ownership and management of Indus, a tower company.
Idea Cellular shares, which gained over 7 per cent on Tuesday, slipped over 3 per cent in the early trade on Wednesday after the company clarified that the news regarding the merger of the telecom company with Vodafone is absolutely untrue and preposterous. As if this case gets arisen then this could be the biggest deal in India as well as in the Telecom space.
The BSE has sought clarification from Idea Cellular.
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The deal will not be an easy one to consummate due to India’s strict policies on market share and spectrum holding. India requires that the market share of the combined entities should not exceed 50% in each of the service areas. Both companies must have done a lot of homework circle-by-circle to figure out the likely impact of the merger. Airtel leads with 25.22 crore subscribers as of April this year.
