Bharti and 4G entrants may look at gaining market share pre-merger and benefit from a lower capex intensity. In the medium term, leverage balance sheet of the combined Vodafone and Idea may limit its ability to participate in data growth, HSBC Global Research.
As the market settles on three (rather than four) sustainable operators, pricing will likely be more disciplined, with a positive impact on ARPU (average revenue per user) and margins. The spectrum costs could also come down as the number of serious bidders shrinks to three.
According to a government official, both Idea Cellular and Vodafone will have to shed their excess spectrum in some circles which could either be shared or traded as per government approved guidelines, Bharti Airtel can take advantage of it.
Both the companies have to surrender excess spectrum in the 900 MHz and 2500 MHz bands across Gujarat, Maharashtra, Haryana, Kerala and Uttar Pradesh (West) circles so that the combined entity does not breach the spectrum holding cap fixed by the Telecom Regulatory Authority of India (TRAI).
Another major beneficiary of consolidation in the sector is the consumer as the experts feel that the three top players (Bharti Airtel, Idea-Vodafone and Reliance Jio) would bring in best technology to retain customers as the differentiator would be quality of coverage.