Here’s why Airtel, Reliance Jio should not worry about Vodafone-Idea merger
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A merger between Vodafone Group Plc .'s India unit and Idea Cellular Ltd . would create a new leader in India but this should not move rival telecom operators Airtel and Reliance Jio as what they will be getting is far more valuable- cheap bandwidth.
The merger might compel Vodafone and Idea to drop some spectrum and subscribers to ensure regulatory approval under India's competition rules. People with knowledge in this matter told Bloomberg thatVodafone and Idea are weighing options on excess airwaves -- including selling or sharing them.
According toCredit Suisse Group AG analysts, spectrum worth more than 60 billion rupees ($890 million) could be at stake and the two carriers would probably sell the spectrum at a lower price than originally purchased.
India is divided into 22 geographic circles and this means that a carrier needs critical mass in each to maximize pricing power within that circle. Both Idea and Vodafone have airwaves in five such circles that exceed the regulatory limit of 50% per band and 25% across all bands, according to Credit Suisse, which estimates the proposed merger has a 60% chance of going through.
The carriers that might be benefitted by bandwidth at cheaper prices areBharti Airtel Ltd ., Telenor ASA's Indian unit, Tata Teleservices .
India has 11 mobile-phone companies serving more than 1 billion subscriptions.
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The merger might compel Vodafone and Idea to drop some spectrum and subscribers to ensure regulatory approval under India's competition rules. People with knowledge in this matter told Bloomberg that
According to
India is divided into 22 geographic circles and this means that a carrier needs critical mass in each to maximize pricing power within that circle. Both Idea and Vodafone have airwaves in five such circles that exceed the regulatory limit of 50% per band and 25% across all bands, according to Credit Suisse, which estimates the proposed merger has a 60% chance of going through.
The carriers that might be benefitted by bandwidth at cheaper prices are
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