On August 31, Idea Cellular Ltd and Vodafone Plc announced completion of the USD 23.2 billion merger of their India operations, creating the country's largest telecom operator to take on competition from Reliance Jio.
Industry body COAI has sought to allay fears of cartelisation due to limited number of telecom players, saying the operators are listed companies conscious of their brand value and the sector regulator keeps a tight vigil.
“…the three private players are (or belong to) listed companies…they are very concerned about their brands. They have built up the value of the brand through years of integrity and looking after customers…and they are not about to throw it (away),” COAI Director General Rajan Mathews told PTI.
He was responding to a query on whether three large private sector players left in the fray post-consolidation could trigger fears of a possible cartelisation.
“The brand value is so high and so important for conducting business in terms of getting the necessary funding from financial institutions that one cannot afford to indulge in these type of shenanigans that will dilute, distort or disrupt the value of fundamental assets,” Mathews argued.
Attracting funds for investments will hinge on safeguarding the brand value, and banks will invariably look at integrity of the institution while lending, Mathews added. “…we expect that the regulator will keep a vigil on what is going on…so the fears in terms of cartelisation are unfounded,” he said.
On August 31, Idea Cellular Ltd and Vodafone Plc announced completion of the USD 23.2 billion (approximately Rs 1.6 lakh crore) merger of their India operations, creating the country’s largest telecom operator to take on competition from Reliance Jio.
The merged entity — Vodafone Idea Ltd — with a subscriber base of over 40.8 crore and market share of over 35 per cent shuffled the industry’s top deck, dislodging Bharti Airtel from its numero uno spot.
Telecom Secretary Aruna Sundararajan has exuded confidence that the Vodafone-Idea Cellular merger will pave the way for a “good competitive scenario” in India.
“We expect that with this merger, the market will begin to stabilise. We expect to see robust growth in the telecom sector with the emergence of three strong private sector players, and one public sector player,” Sundararajan had said earlier.
The telecom sector has witnessed a spate of consolidation aimed at finding economies of scale after Reliance Jio ploughed USD 25 billion into a pan-India national 4G data service, offering free voice call and tariffs well below prevailing rates. Jio has amassed 230 million subscribers in two years of its launch.
Bharti Airtel fired the starting gun with the acquisition of the Indian business of Norway-based Telenor. It subsequently announced takeover of consumer mobile businesses of Tata Teleservices Ltd (TTSL) and Tata Teleservices Maharastra Ltd (TTML).