Voda-Idea merger expected to benefit telecom industry, say experts

Analysts and experts of the Indian telecom industry have expressed hopes that the Vodafone-Idea merger announced yesterday will act positive for both industry and consumers in the long run.

However, they have also said that in the short run, both Vodafone India and Idea might lose customers and revenue to present market leader Bharti Airtel, which would rank second in the market once the new entity is born. Reliance Jio Infocomm could also gain some customers and revenue from Voda and Idea if they get too involved in the merger complexities.

Also read: Reliance Jio will be unfazed by Vodafone-Idea merger. Here’s why

Sanjay Kapoor, ex CEO of Bharti Airtel told ET that in the short term, the industry won’t see much impact because of the merger, since Jio would continue winning hearts because of network capacity and low prices.

Also read: Vodafone CEO Vittorio Colao assures employee job safety post Vodafone-Idea merger

"Idea and Vodafone could end up losing customers and revenue in the short term, if they take their eyes off the ball due to operational complexities associated with any merger," he said. Kapoor, in fact, expects that Airtel and Jio might come together to pull customers from Vodafone and Idea.

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Rajan Mathews, director general of the Cellular Operators Association of India (COAI), which represents Airtel, Vodafone India, Idea and Reliance Jio, also said that both merging companies could lose customers if they don’t conclude the merger exercise soon.

Brokerage Motilal Oswal also shared his two cents, saying, "Since the telecom market is highly competitive, given Jio's capacity game, there is a major market share dilution risk if the deal takes a prolonged period to fructify."

(Image source: Financial Times)