In January, Vodafone confirmed that it was in talks with the Aditya Birla Group regarding the possible merger of Vodafone India and Idea Cellular. It looks like the two companies were able to come to an agreement, as they have announced that they are officially joining forces.
Vodafone is the second biggest mobile operator in India, followed by Idea in third place. The merger will create the largest mobile operator in India with around 400 million customers, a 35 percent market share, and a 41 percent revenue market share. Vodafone will own 45.1 percent of the combined entity while the Aditya Birla Group, which is Idea’s parent company, will own 26 percent.
The deal isn’t closed yet, as these things do take quite some time before they are finalized. The merger process is expected to be completed within a period of 18 to 20 months.
The reason why Vodafone and Idea have decided to merge is quite simple. Both of them are facing increased competition from Reliance Jio, which is owned by India’s richest man, Mukesh Ambani. The company has been extremely successful in India so far and managed to get 100 million subscribers on board in just 170 days.
Reliance Jio is responsible for quite a few changes in the Indian market. Its rivals, including Vodafone and Idea, had to lower their prices in order to stay competitive. By joining forces, the two companies now hope that they will be able to fend off its biggest competitor.