Vodafone India, Idea to merge following Jio ‘disruption’ | Major Businesses | Business
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The UK’s Vodafone is to merge its Indian operations with local competitor Idea Cellular to create the country’s largest mobile operator, in a deal worth US$23 billion.

vodafone logoThe merger is the second such deal between Indian mobile operators this year, with Bharti Airtel already set to acquire the Indian business of Norway’s Telenor.

Both come in the wake of mass disruption in India’s mobile communications sector, caused by the free call offers and video-friendly tariff packages offered by young 4G upstart Reliance Jio, after the launch of its $25 million pan-Indian network last year.

The scale of the merged company could better help take on the rivals: the Vodafone/Idea entity would have around 400 million users and 35% of the market share, based on subscriber numbers. Vodafone would take a 45.1% stake in the new company, with Idea’s parent company Aditya Birla Group holding 26%.

India’s appetite for mobile communications, especially broadband, is growing at an impressive pace, with a dramatic shift in video streaming sector in the six months to the end of 2106. Total time spent on the top ten video streaming apps including Hotstar and Netflix on Android phones in India increased 600% between July and December 2016, compared to the same period the year before, said App Annie’s fourth annual Retrospective Report, published in January 2017.

“India’s phenomenal progress over the past two years is even more impressive when considering its potential for further gains. In 2016, India surpassed the US as the second largest smartphone market due in large part to a rise in domestically produced smartphones. This is only the beginning, however, as India’s smartphone penetration is still below 30% and its overall economy is poised for massive growth,” said the report.

Vodafone has recently become the only of India’s mobile operators to offer its customers Netflix, and this week announced it will also provide rival streaming service Amazon Prime Video on its 4G network from 22 March.

“The entertainment consumption patterns of customers are rapidly changing. They want more freedom and flexibility in the way they consume content,” said Sandeep Kataria, director – commercial, Vodafone India.

“This partnership with Amazon Prime Video does just that, further strengthening our content proposition and reiterating our commitment to offering the best to our customers along with unique privileges. It makes available a wide range of latest, high quality movies and TV shows to our millions of customer, giving them exclusive access to a diverse selection of entertainment and rich content with an unparalleled streaming experience on the data strong Vodafone SuperNet 4G network.”