India's Biggest Telecom Giant is Here and Beware Jio, Airtel

After months of speculations and then pleas with the Government, we have a new biggest telecom giant with the merger of Vodafone and Idea.

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The Indian telecom industry has seen a lot of ups and downs in the past few years. While new entrants like Reliance’s Jio stirred things up, the oldies in the crowd were not ones to get back down. Instead, new plans floated and customers just got the better deal.

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With aggressive plans from Jio that forced all other operators to reduce their payment plans and change their tariffs completely, it was only a matter of time before the Industry saw an overhaul.

And now after months of speculations and then pleas with the Government, we have a new biggest telecom giant with the merger of Vodafone and Idea.

The Government Approval

While the news about the merger was confirmed long back in 2017, the final go ahead lay in the Government’s hands. Initially, the government had given a conditional approval for the merger. According to reports, the department of telecommunications had given the nod to the merger on the condition that the arrears coming up to over INR 7,250 crore are paid to the government. Both the companies had even protested to the condition and had even requested for recalculations of the total fine. However, the DoT had rejected their claims for a recalculation.

Now, the Department of Telecommunication has provided the final approval for the merger after the two big telecom firms gave the said amount as one-time spectrum charge.

This has made way for the combined entity to be the country’s largest mobile phone operator with over $23 billion and a whopping 35 per cent market share.

What it Means For the Industry

Several government officials have been quoted to say that the merger was important to bring in stabilization in the sector. In earlier interactions with news agencies, telecom department’s secretary Aruna Sundararajan had said that the consolidation of the two companies is a big milestone and will make way for robust growth.

With Reliance Jio’s blazing entry into the sector which had set off a major tariff war, the consolidation of Vodafone and Idea was ideal. Both Idea and Vodafone were debt ridden companies and the merger is sure to make things better by reducing the cost of operations. According to reports, in the merged establishment, Vodafone would take home a 45.1 per cent stake, the Aditya Birla Group would claim a 26 per cent stake while Idea Cellular would have a 28.9 per cent stake.

This brings us to another interesting phase of the Indian telecom industry. Vodafone and Idea have projected that the merger will make way for only better news for their users (although the delay in the merger also cost them customers), as the merger will bring with it better infrastructure and service.

Well it looks like in the crowded telecom industry of India, consolidation seemed to be the only key to move forward. What remains to be seen is how Jio and Airtel will fight back.