The Indian arm of UK Telecom giant, Vodafone India might be going for a merger very soon with one of the Indian majors. The competition in India has heated up ever so much since the launch of Reliance Jio.
Vodafone India has been trying to do damage control with some new offers, but Airtel has also been giving it a hard time with new and better offers. According to reports by Telegraph UK, Vodafone India is looking to join other Indian majors like Idea Cellular or Reliance Jio.
“Vodafone is weighing a potential merger of its Indian arm with rivals as it seeks a turnaround in the sub-continent’s cut-throat mobile market,” the report said. The competition from Airtel and Jio combined has been causing too many problems to Vodafone’s share in the market.
Right now it is not very clear as to whether Vodafone India will join Idea Cellular or Reliance Jio, or all the three will merge together to form one large telco. But it doesn’t sound like a positive news for Airtel, that has been trying to capture the largest market share.
Vodafone hasn’t gone for its IPO yet, and it seems that Mukesh Ambani might not be interested in the deal. However, Idea Cellular, owned by Birla Group, could be the first to purchase majority of the shares in the company.
The report also said, “Vodafone’s parent, in November, had cut the valuation of its Indian unit by €5 billion citing increased competition, which had caused its global loss to double. The telco also delayed its plan to launch an IPO to be listed on stock exchange in India.”
It also does not make sense for Reliance Jio to acquire Vodafone because Jio’s strategy has always been to offer cheaper tariffs to its customers and the latest super fast technology for use. Vodafone’s systems do not work like that and could hinder Jio’s growth.
What does this mean for Airtel?
With over 200 million customers, Vodafone is not a small telecom. Airtel leads the pack but Vodafone’s customer base can help any other large telecom to grow exponentially in a small amount of time.
Airtel has also been seen to have a high 97.5% retention rate, as compared to 85% on Reliance Jio. Vodafone’s shares have been going down because the customers are not happy, and the investors don’t see a light at the end of the tunnel.
Bharti Airtel should continue to roll out interesting offers to its customers to keep them engaged, while it is already launching some new acquisition offers. Airtel network is also more reliable, and the company has taken some steps to ensure the same.