Vodafone's Indian arm announces mega-merger with Idea Cellular

Helen Cahill
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The group will have more than a third of India's mobile customers (Source: Getty)

Vodafone is merging its Indian operations with its rival in the region, Idea Cellular, in a move that will create the largest mobile phone operator in India.

The group will have around 380m customers in India, which represents more than a third (35 per cent) of all mobile phone users in the country.

Idea Cellular's parent company, Aditya Birla Group, will pay 39bn rupees (£467m) for a 4.9 per cent stake of the combined group, meaning that in total it will own 26 per cent of the company. When the companies confirmed the tie-up Idea Cellular's shares jumped 15 per cent in Mumbai trading.

Read more: Vodafone to create 2,100 new UK jobs

The merger will allow Vodafone to bat off some fierce competition in the Indian telecoms market. Reliance Jio, a new entrant owned by India's richest man, Mukesh Ambani, has been forcing Vodafone and Idea Cellular to cut prices.

Vodafone chief executive Vittorio Colao said: "The combined company will have the scale required to ensure sustainable consumer choice in a competitive market and to expand new technologies - such as mobile money services - that have the potential to transform daily life for every Indian.

"We look forward to working with the Aditya Birla Group to create value for all stakeholders."

Nick Jones, partner at Cavendish Corporate Finance, said: “This merger will enable India’s leading operators to compete with Reliance Jio, India’s challenger operator, which, since its arrival in September 2016, has caused significant disruption in the market.

"Consolidation in the sector is inevitable, as network and cost synergies are desperately needed to ensure long term survival as we can expect the tariff war to continue."

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