Meanwhile, the new player Reliance Jio has notched up a revenue market share of 15.4 per cent in just 15 months of commercial operations. The Mukesh Ambani-owned company is targeting to capture a 50 per cent revenue market share in three to four years. In this backdrop, Vodafone Idea will find it challenging to remain the top player in India, analysts said.
In terms of combined spectrum holdings also, Vodafone Idea will be lagging behind the Airtel-Telenor-Tata Tele combine.
As per a report by UBS, the spectrum share of Vodafone Idea will be around 27.2 per cent whereas that of Airtel along with Telenor comes to around 23.5 per cent. If Tata Teleservices’ 5.7 per cent is added, Airtel’s spectrum holding will exceed Voda-Idea’s.
Reliance Jio currently has a spectrum share of 16.2 per cent, when Reliance Communications’ 7.4 per cent is added, the total goes up to 23.6 per cent. The approvals for both Airtel-Tata Teleservices and Jio-RCom deals are underway.
The huge pile of debt at over Rs 1 trillion for the Vodafone-Idea combine and a not so healthy debt to EBITDA ratio will further makes things tough for the combined entity.
The government is likely to approve the Voda-Idea merger soon. It may ask Idea to liberalise Vodafone’s administratively allocated spectrum costing about Rs 40-45 billion in cash for Idea.
Idea Cellular has already finalised the sale of its tower portfolio which will get the company Rs 40 billion. Sale of its 11.5 per cent stake in Indus Towers can rake in another Rs 65 billion, which would help reduce the debt of the merged entity. Both the companies
have already started sharing their mobile sites.
Idea has called an extraordinary general meeting on June 26 to raise about Rs 150 billion more in one or more tranches in a year.
To spearhead the merger process, Aditya Birla Group chairman Kumar Mangalam Birla had recently met Telecom Minister Manoj Sinha. The DoT, it is learnt, is likely to facilitate the merger as it wants to give out a positive message to the industry, which is currently facing financial stress.
Idea Cellular recently converted its CMTS (cellular mobile telephone service) licence into UL (unified licence) in six circles as part of the merger process. Now Idea Cellular has either a UL or UASL (unified access service licence) in all the 22 telecom circles of the country, allowing the company to offer all types of services including landline. Under CMTS, landline services are not allowed.
had earlier this year announced a restructuring of the leadership team for the merged business that would have Kumar Mangalam Birla at the helm as the non-executive chairman. Vodafone insider and current Chief Operating Officer (India) Balesh Sharma would be the chief executive officer (CEO) of the merged entity.