UK based telecom major Vodafone is looking to merge its India business with a top local telecom company. This is said to be due to the changed market dynamics due to the entry of Reliance Jio. It is said to prefer Aditya Birla group owned Idea and Reliance Industries owned Jio.
The entry of Reliance Jio has upset the businesses of all major telecom operators. By offering free data, messages and calls, Jio has been able to acquire over 52 million customers and is on path to rech a 100 million by this March.
Vodafone is India’s second largest telecom provider after Delhi based Airtel. All major service providers have come up with new plans for existing and new customers to take on Jio, but that itself does not seem to be enough. Vodafone’s mother company in UK devalued the Indian business by Euro 5 billion due to the hyper competitive market and may actually be looking to sell of its business rather than merge.
Vodafone UK had infact sent Rs 47,700 crores to its Indian arm to reduce its debt from Rs 81,500 crores to Rs 35,430 crores. Also, Vodafone had in 2010 said that it is looking to list the Indian business on an Indian stock exchange and become a publicly traded company. However, with the entry of Jio, that looks like a distant dream as no company executive is willing to talk about it.
Kumar Mangalam Birla led Aditya Birla group may seem to be the most interested party as Jio may not be interested in the offer. Reliance Industries has mostly followed a model of growing organically in order to grow their businesses and hence may not buy or merge with Vodafone.
Other small telecom providers are also looking to move out of the business. Aircel, another telecom major is looking for buyers, but its legal problems are preventing any takeovers. Telenor is in advanced talks to sell its business in India. Airtel seems to be in aposition to win that business.