With the launch of Reliance Jio in 2016, the telecom sector has become a battleground for supremacy among the top. After its launch, Jio lured consumers with freebies and massive data at cheap prices.
With the launch of Reliance Jio in 2016, the telecom sector has become a battleground for supremacy among the top. After its launch, Jio lured consumers with freebies and massive data at cheap prices. The affordable Jio offers disrupted the telecom market, leading to unprecedented price wars. While on one hand, telecom companies started fighting for becoming the number one, customers benefited with the resultant price wars. But more is yet to come.
With the Vodafone-Idea merger in the offing, the telecom battle is likely to become more intense. Consumers can expect another round of party. Various media reports have suggested that the merger is expected to heavily bring down the price of various services offered by telecos.
In a report by Forbes last year, Britain’s Vodafone Group confirmed that the all-share deal with Idea Cellular would create a new market leader, better able to contest a brutal new price war.
According to analysts at Berenberg, a combined Vodafone-Idea group would have around 375 million subscribers and around a 36 per cent market share, well ahead of Bharti with around 260 million subscribers. Berenberg also said two firms would complement each other geographically.
Vodafone-Idea merger to add fuel to the fire started by Reliance Jio:
With a lot more resources at its disposal than that of Jio and Airtel, the merged entity of Vodafone-Idea only will make the price-war messier. The merger may lead to more consolidation. As of now, Vodafone and Idea have struggled to keep up with the benefits and offers that Jio and Airtel are offering to the consumers. But after the merger, situation is expected to change. Vodafone-Idea would be able to give higher data and more freebies at dirt cheap prices as compared to its competitors. According to media reports, the reason behind this is the price war between these companies for the revenue share in the telecom market.
Reports suggest that Jio, in order to raise its revenue shares to 30 per cent, can lower prices of its plans. Currently, the revenue market share is almost 20 per cent for the Mukesh Ambani-owned company.
5G services to reach early and better connection:
Idea cellular in its statement said that companies will focus on building a better 4G and 5G coverage in the years to come. This would result in better services. “Sustained investment by the combined entity will accelerate the pan-India expansion of wireless broadband services using 4G,4G+ and 5G technologies,” the company said. The merger, however, will lessen the number competitors, which would be a good news for Jio too.
Last year in January, Reuters reported a telecom industry analyst at a domestic brokerage as saying that a smaller field would make it easier for Jio to “get a decent market share and make profits.”