Vodafone, Idea may have to sell excess spectrum A LEAGUE OF THEIR OWN

Airtel CEO hits out at ‘forced situation due to unfair playing field’

For the Vodafone-Idea Cellular merger to sail through, the two companies will have to first shed excess spectrum in the 900 MHz and 2500 MHz bands across Gujarat, Maharashtra, Haryana, Kerala and Uttar Pradesh (West) circles so that the combined entity does not breach the spectrum holding cap fixed by the Telecom Regulatory Authority of India (Trai), analysts say.

As per Trai guidelines on merger and acquisitions, no company can hold more than its prescribed share of spectrum in any circle.

To comply with those guidelines, the combined entity (Vodafone-Idea) may have to sell additional spectrum including some airwaves in 2500 MHz band in the Gujarat and Maharashtra circles and some in the 900 MHz bands of Gujarat, Haryana, Kerala and Uttar Pradesh (West) circles.

On January 30, Vodafone confirmed it was in talks for an all-stock merger of its unlisted Indian subsidiary with rival Idea Cellular.

The proposed merger would not include its 42 per cent stake in Indus Towers, a three-party venture with Bharti Airtel and Idea Cellular. Circle-wise December subscriber additions

The talks between the two companies re believed to have started after the launch of Reliance Jio.

Vodafone was earlier in merger talks with Tata Teleservices but did not go ahead. After a merger with Idea, a listed entity, Vodafone shares would also be up for trading.

Post-merger, the combined entity would become India's largest telecom company in terms of revenue share in the market, at 43 per cent. It would also be the largest in subscriber base at 387 million, based on current numbers.

Commenting on the Vodafone-Idea merger, Gopal Vittal, Bharti Airtel CEO (India and Southeast Asia), said that consolidation was good for any capital intensive sector with multiple players. Vittal said, “It is important to ensure that such consolidations are not an outcome of a forced situation created by offering an ‘unfair playing field’ to any particular company while completely destroying the viability of the others.”

Although Vittal did not name any company, analysts said the Airtel chief executive officer was referring to competition from Reliance Jio.

“Airtel and other incumbents face two types of competitive threats: one is that there are too many competitors and the second is that Jio, in particular, is a formidably ambitious and deep pocketed one. The Vodafone Idea merger will mitigate the first but not the second,” Mahesh Uppal, an independent telecom analyst said.