Friday, 20 January 2017

Vodafone, Idea deny Jio tie-up rumours

By Nick Wood, Total Telecom
Tuesday 10 January 17

Operators reportedly cite caps on spectrum, revenue market share as barriers to major mergers.

Vodafone India and Idea Cellular on Tuesday denied they are mulling mergers with disruptive newcomer Reliance Jio Infocomm. Sources at the two mobile operators were cited in a Hindustan Times report as saying that the country's telecoms regulations rule out the possibility of such deals…

Vodafone India and Idea Cellular on Tuesday denied they are mulling mergers with disruptive newcomer Reliance Jio Infocomm.

Sources at the two mobile operators were cited in a Hindustan Times report as saying that the country's telecoms regulations rule out the possibility of such deals.

"The law of the land doesn't allow this. There are spectrum holding caps and revenue market share caps," said a Vodafone source, in the report.

Furthermore, a source at Idea said when it comes to the possibility of combining with Reliance Jio, "it's mismatched DNA" between the two.

Regulations and different corporate cultures are not the only barriers to major mergers either.

"The telecom industry [in India] is in high debt, and there is almost no space to add more debt," said the Vodafone source.

The denials come after the U.K.'s Telegraph over the weekend reported that Vodafone India is considering whether to merge with one of its local rivals in order to ease the pressure wrought by the price war sparked by Jio. Sources cited by the newspaper claimed that Idea and Jio could also merge.

Operators have been cutting fees and launching aggressive offers since Reliance Jio began offering free nationwide calls and mobile data last September. Jio has pledged to keep providing free services at least until the end of March.

Vodafone is feeling the heat; in November it wrote down the value of its Indian operation by €5 billion, blaming it on the competitive situation there.

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