In light of the ever-growing competition on the home front as Reliance Jio offers maximum service at minimal rates, the Chairman of Telecom giant Bharti Airtel Sunil Bharti Mittal has stated that a merger of Vodafone India, the country’s second-largest telecom operator, and Idea Cellular, the third largest player, would be a ‘perfect match’. Mittal was quoted on the sidelines of the 47th World Economic Forum currentlyunderway at Davos. This has raised speculations as to the future of mergers and acquisitions in the domestic market in the near future.
Mittal was quoted by BloombergQuint as stating,”It’s a perfect match. If you look at it, the match is not bad. But you know I can’t sit on the minds of Vittorio (Colao) or Kumar (Mangalam Birla). The strength and weaknesses match very well. Rural – urban, structured portfolio…makes for a good business case and I would support it. One effect of Jio has been that the small operators are gone. I support consolidation in the industry, wherever we have seen two-three operators with large markets, they have been profitable, they have been able to make large investments and give a lot of revenue to the government.”
The Bharti Chairman also stated that while these two telecom giants have competed with each other in the country, a merger would be good for the overall domestic business, especially after the entry of Reliance Jio. This was leading to a lot of difficulties in 6-7 smaller circles and was forcing smaller players to quit. However, Mittal also clarified that he did not know anything about the futures of these two giants, shared or otherwise, and he was unaware of any plans that may have been made.
There have been reports stating that Vodafone is looking for an alliance with either Reliance Jio or Idea Cellular. Global brokerage firm CLSA, which focuses on institutional brokerage, investment banking and asset management for corporate and institutional clients around the world, had stated earlier that an alliance with Idea Cellular would be the best option for Vodafone India. A potential merger would emphasise both operator’s operational strengths and would also pave the way for a backdoor listing of its business without resorting to any IPO process.
The Bharti Chairman has also confirmed ongoing acquisition talks with Norway-based Telenor for the latter’s Telenor-India operations, signalling its exit from India. Previously, Bharti has also acquired spectrum from the likes ofVideocon, Aircel andAugere.