Idea Cellular Pvt Ltd and Vodafone communications India have merged together in order to become countries biggest telecom company, ahead of Bharti Airtel. Reports are that companies are exploring different business operations to improve their financial health and market value.
As the merging news went live on Monday the market capitalization of Bharti Airtel, Vodafone India, and Idea Cellular have grown to $4 Billion on the same day.
Commenting on this Ex-Executive of Bharti Airtel, Sanjay Kapoor said “Consolidation on this scale would improve the financial health and sustainability of the industry and improve coverage quality and customer experience. With larger balance sheets and much-needed serious investments in technology and customer experience are required, which telecoms with mid-sized balance sheets are in no position to make.”
In less than a year, the big-league tele-companies will join forces with Fringe companies like Telenor, TATA teleservices etc. According to a rating company named Fitch, the industry revenue will grow minimum 5% after January 2017. In next 12 months, the average revenue per user is likely to increase by 10-15%.
The merge value will likely be of Rs.80, 000 Crore. They are total 39 crore subscribers of Idea and Vodafone together. This merging would help Vodafone to improve its position in rular markets and Idea would gain Vodafone strength from metro circles. If the deal work through, the merging will bring Vodafone’s 42% stake in Indus Tower, which is India’s Largest tele-tower company.
RJIO have Violated the TRAI orders, says Vodafone:
Vodafone India has moved to High Court in Delhi on Monday alleging Reliance Jio Infocomm Ltd (RJIO) have violated the orders and regulation of TRAI. Vodafone has also claimed that TRAI has failed to implement Department of Telecommunications (DoT) circulars which lay down that all the traffic plans must be compliant of inter-communication user charges (IUC), non-discriminative and non-predatory.
However, affected the Court Justice Sanjeev Sachdev who has been listening to the matter has passed no comments and the court has passed an order which affects the telecom company.
Vodafone has contented its plea that “TRAI themselves has passed a regulation in 2002 that no telecom service provider cannot exceed their promotional traffics plans more than 90 days. The free trail offer from RJIO has exceeded more than 90 days which should end in December 2016.”
The respondent form TRAI have ignored the petitioner’s presentation and moved on with other procedures.
Since Vodafone India and Idea Cellular are both behind the curve in terms of investments and their broadband network rollouts, they have little time to lose. The success of the merger will depend largely on the structure the new company adopts. While an organization structure that allows nimble moves is an imperative, it remains to be seen if this is possible in a company that has two large investors with equal rights. Read more Business News
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