‘Voda-Idea Com­bine to Out­shine Air­tel & Jio’

SIZE MAT­TERS: En­tity would have more net­work ca­pac­ity than Jio & higher spec­trum hold­ing than Air­tel: Credit Suisse

The Economic Times - - Companies: Pursuit Of Profit - Kalyan.Par­bat @times­group.com

Kolkata: A po­ten­tial merger of Vodafone In­dia and Idea Cel­lu­lar would make the com­bined en­tity the big­gest spec­trum holder in In­dia and knock off Re­liance Jio In­fo­comm from the top slot on the over­all net­work ca­pac­ity mar­ket share met­ric, an­a­lysts at Credit Suisse said.

Ac­cord­ing to the Swiss bro­ker­age, if Vodafone and Idea were to merge, the com­bined en­tity would have 35% net­work ca­pac­ity share, dis­plac­ing Jio, which would have 31%. UK’s Vodafone Group and the Aditya Birla Group are in talks to merge Vodafone In­dia and Idea in an all-share trans­ac­tion, in their bid to forge a stronger front to com­bat Jio, which is owned by In­dia’s rich­est man, Mukesh Am­bani.

The merged en­tity, the bro­ker­age said, would com­mand a 26% spec­trum mar­ket share and rel­e­gate Bharti Air­tel to sec­ond place on this score. At present, Bharti Air­tel leads the in­dus­try in terms of spec­trum hold­ing with a 21% mar­ket share, with Jio at sec­ond spot with 17%.

“In­di­vid­u­ally, Vodafone and Idea ap­pear quite lack­ing in 3G/4G spec­trum ca­pa­bil­i­ties, but when com­bined, the spec­trum foor­print looks com­pa­ra­ble with Jio and Bharti,” Credit Suisse said in a note, a copy of which is with ET.

The bro­ker­age, how­ever, sa- id: “Jio would con­tinue to lead in ca­pac­ity share of data net­works by virtue of its large data spec­trum hold­ings and ex­clu­sive 4G de­ploy­ment.”

An­a­lysts at Credit Suisse said if the coun­try’s No. 2 and No. 3 tel­cos merge, im­bal­ances in the com­bined en­tity’s rev­enue mar­ket share (RMS) and net­work ca­pac­ity share would con­tinue. It said the merged en­tity’s 35% net­work ca­pac­ity share would be sig­nif­i­cantly be­hind its en­vis­aged 42% RMS. “His­tor­i­cally, RMS has had de­cent cor­re­la­tion with ca­pac­ity shares, but with the im­bal­ance ev­i­dent in the above fig­ures, pres­sure would sus­tain on in­cum­bents to con­tinue to add ca­pac­ity at a time when Jio has re­cently an­nounced ex­pan­sion plans of its own,” said the Swiss bro­ker­age.

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