Sirji Saying Vodafone-Idea merger not a good Idea
The Power of Three: Why the Vodafone-Idea Merger is Not a Good Idea, Sirji.
There are many who think that the speculated merger between Vodafone and Idea will be good for Indian telecom, bringing greater uniformity to a crowded operator scenario. But is that really the case? Our telecom Sherlock, Viranch Damani, takes a closer look at the facts, and realizes that the repercussions of the deal are not exactly…elementary.
Consolidation has been the theme of the Indian telecom industry for the past few years. It started with Loop trying to sell its Mumbai operations to Airtel but failing to do so because of issues DoT had with Loop customers being transferred to Airtel. The deal with Airtel fell apart but Loop nonetheless packed its bags and left Mumbai as its license was expiring and it was in no mood to buy spectrum in Mumbai. Loop’s departure was then followed by a slew of mergers and acquisitions, which saw MTS merging with Rcom, Videocon selling itself to Airtel, Aircel trying to merge itself with Rcom and now comes news of Vodafone and Idea thinking of a merger.
As per reports so far, the Vodafone-Idea merger will be an all-stock deal where fresh shares in Idea will be issued to Vodafone. Both Vodafone and Idea will have equal voting rights in the new company and Himanshu Kapania, the current CEO of Idea is expected to be the CEO of the merged entity. Most analysts have been upbeat about the Vodafone-Idea merger. The general consensus is that the Indian telecom industry is too crowded and the number of operators needs to reduce going forward.
Now, while I agree that the Indian telecom industry is very crowded compared to international markets, and consolidation needs to happen amongst some operators as we move forward, but I feel we need to take a closer look at how crowded the Indian telecom industry really is. While on paper the Indian telecom industry does indeed look crowded, looking at the raw number of telecom operators in the country, it is necessary to evaluate the competitive intensity at various levels and then come to a conclusion.
The Power of Three: Why the Vodafone-Idea Merger is Not a Good Idea, Sirji
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