The Telecom company Idea which announced its merger plans with the Vodafone last year has decided to raise 1.1 billion dollars. It aims to perform the task by selling its shares to its parent company, Aditya Birla group.
The merger between two companies will make them the biggest telecom player in India. Vodafone, which is already locked in the issue of tax battle with the government will be an equal partner in the deal. The aim of the deal, as envisioned by many experts in the media is to combat the ongoing challenges in the telecom space. we can expect to see many more such mergers and consolidations in the year 2018. The market is adopting new players in the space.
The Reliance Jio has practically broken the price structure of every other telecom company, forcing them to either reduce their price charts or lose market share if they ever had one. The significance of the offers became much more important for all the telecom companies like Vodafone, Airtel, and Uninor. The cheap price and free offers became coupled with high data speed became one of the strongest points for reliance Jio to easily capture the significant amount of market. The idea company which is the third largest telecom player has also decided to sell its shares to the institutions.
The Deal of Idea
The deal between companies is expected to be completed this year. The finalization of the deal will see an improved market share of the company. They have more than 40 crores of customers and one of the key parts of the deal was to reduce network sites at the places where there is overlap.
The company supplying them equipment will have to integrate the combined process. They were looking for reducing energy and saving costs. As a few of the experts believe that the deal may bring bad network coverage for the customers. The deal would be the biggest success story in the telecom space, as is envisioned by the company.
This year will be the deciding year for the companies like Airtel and Vodafone, who have been trying hard to compete in the already crowded market of telecom. As government has recently announced that it is highly unlikely that there would be any spectrum sale, this becomes highly interesting to see what the telecom companies would do to cover the market space.TRAI, which has also toughened its stances on the call drop issue has decided to penalize the faulty companies.
The market share by the biggest of telecom players is one of the prime reasons for the intense battle which is becoming more and more intense as time passes. The plan for raising funds by Idea company is a step towards boosting its future growth and increasing liquidity.
Though the recent developments in the deal seem to suggest a positive growth for the telecom sector, we are yet to see how it rolls out for the users of both the companies. The Board did give permission for the deal but will consumers do?