In what is being billed as a ‘mahagathbandhan’ in the economic sphere, the London-headquartered Vodafone and Kumar Mangalam Birla-controlled Idea Cellular have announced India Inc’s biggest-ever merger making the upcoming new entity the country’s undisputed leader in telecom. With a combined subscriber base of a whopping 394 million subscribers, the new company will not only surpass the current leader Bharti Airtel’s 270 million but also occupy the number 2 spot globally after China. This is doubtlessly a move to be one-up on Mukesh Ambani’s recently-launched Reliance Jio which will be watched for what it does to counter the new competition. For the record, however, the merged entity has denied that the motivation was to beat Reliance Jio. It has ascribed the merger to “arrival of data, which is very capital heavy and consumes a lot of spectrum.” Interestingly, though Vodafone will have a higher stake, the two companies would have equal voting rights and Kumar Birla will be the chairman of the new company.
The telecom space has seen a lot of action in recent times with the scene of action being India. The Norwegian giant Telenor sold out to Bharti Airtel, Japan’s NTT DoCoMo exited an under-performing joint venture with Tata Teleservices while S. Sivasankaran’s S. Tel and UAE’s Etsilat had exited the country when the spectrum auction scandal hit this country six years ago. Australia’s Telstra and South African major MTN had called off their plans for India in the wake of the spectrum controversy and intense market competition. Now, under the Narendra Modi dispensation, the tide seems to be turning for the better with the Vodafone-Idea Cellular merger. There is recognition abroad of the huge Indian market waiting to be further harnessed. The future is therefore pregnant with possibilities in the telecom space.
