Vodafone, Idea Merger Creates India’s Largest Telecom Entity
The merger between Idea Cellular and Vodafone India into a new entity called Vodafone Idea Ltd. has displaced Bharti Airtel Ltd as India’s largest telecom service provider.
The merger between Vodafone India and Idea Cellular, two of the largest telecom firms in India, was officially announced on Aug. 31 after the National Company Law Tribunal (NCLT) approved the move. The new entity called Vodafone Idea Ltd. has collectively acquired 408 million active subscribers and a market share of 32.2 percent, making it the largest cellular network in India.
The merger has edged out Bharti Airtel Ltd as the leading telecom service provider in India after about two decades. It is expected to generate Rs 14,000 crore in synergies annually, Livemint reported.
“Today, we have created India’s leading telecom operator. It is truly a historic moment. And this is much more than just about creating a large business. It is about our Vision of empowering and enabling a New India and meeting the aspirations of the youth of our country,” Kumar Mangalam Birla, Chairman, Aditya Birla Group and Vodafone Idea Limited, said in a statement. “The union aims to accelerate India’s progression towards a digital economy, enabling millions of citizens to connect to the digital revolution and build a better tomorrow. We will continue to offer a wide variety of digital services and solutions under both of our popular and loved brands (Vodafone and Idea).”
The new network promises to bring superior quality voice and data service experience along with a variety of digital services and solutions, including mobile payments, Internet of Things (IoT), advanced enterprise offerings and entertainment. Consumers will be offered extensive on-ground presence through about 15,000 branded outlets and 1.7 million retail touchpoints across the country, the statement said.
The merged entity will compete in the Indian telecom sector with Bharti Airtel Ltd, the Mukesh Ambani-promoted Reliance Jio Infocomm Ltd, and the government-owned Mahanagar Telephone Nigam Ltd (MTNL) and Bharat Sanchar Nigam Ltd (BSNL).
While the “marriage” between the two firms was announced on Twitter through a series of witty tweets by both the companies, Reliance Jio stole the show with a subtly teasing tweet which has been retweeted over 6,000 times, gaining over 12,000 likes.
— Reliance Jio (@reliancejio) August 31, 2018
— Vodafone (@VodafoneIN) August 31, 2018
Hey, @VodafoneIN you know they're all talking about us.
— Idea (@Idea) August 31, 2018
Other social media users soon jumped into the fray, with their own wisecracks about the deal. Even Airtel India found its way into the conversation, with some customers expressing their wish to switch to Airtel.
Two worst network together with their pathetic services. Time to switch to other networks. @reliancejio & @airtelindia have far better services, customer care responses & no fake offers. #fakevodafeoffer
— Taral Chaudhari (@taral_9007) August 31, 2018
Hi! We’re delighted to hear you want to join our family, Taral! Let's head over to: https://t.co/nnJMD12GYs to know more information about the process and I'll still be here if you need anything further. Thank you, Eshmeet
— Bharti Airtel India (@Airtel_Presence) August 31, 2018
Does Vodafone & Idea merger simply mean bad signal in a wider area?
— Shiv Aroor (@ShivAroor) August 31, 2018
Congratulations for the merger. Expecting ZooZoos to sing "Kal Dekhe so aaj Dekh" in the next advertisement. 🙂 😛
— Jayesh Nagpal (@jayeshnagpal) August 31, 2018
— Aravind M Nair (@aravindnair) August 31, 2018
The discussion on the social media also saw people talking about how the reason between the union is mainly Reliance Jio’s increasing customer base with their cheap data services.
“JIO Ne Bana Di Jodi” finally my current service provider #Vodafone got merged w/ Aditya Birla’s #Idea 2 found India’s largest cellular company. This merger is outcome of JIOfied India, I hope post this Vodafone will improve its service. I must say Vod-a-Idea SirJi. #vodafoneidea pic.twitter.com/NACgqzF6rO
— Neeraj Rathi (@NeerajKRathi) August 31, 2018
— Himansh Dhomse (@HimanshDhomse) August 31, 2018
The companies have together committed to creating a digital India where services will be provided to nearly 500,000 towns and villages. Both the companies jointly had a revenue of nearly Rs 58,675 crore for the last 12-month period ending June 30 and an operating margin of close to 20 percent. With the merger it is expected to have a net debt of more than Rs 1 lakh crore, while the leverage ratio (net debt-to-Ebitda) is expected to be close to nine times, according to data compiled by BloombergQuint.