Idea Cellular’s long mooted merger with Vodafone will be one of the biggest deals in Indian telecoms history
Idea Cellular’s share price jumped by 18 per cent this morning, upon news that the company had made payment of monies due to India’s Department of Telecoms, one of the final hurdles believed to be holding up the company’s planned merger with Vodafone.
Idea’s shares were trading at 60.70 Indian Rupees per share earlier today but have since lost some ground to settle at 56.20 Rupees.
Idea Cellular is expected to submit its Q2 financial report on the 30th June, when analysts and shareholders alike are expected to press for clarification on Idea’s position on the proposed merger.
India’s cut throat telecoms market remains one of the most competitive in the world, with super low prices for consumers translating into wafer thin (near non-existent) margins for operators.
“The payment by Idea is a clear indication that there will be no further delays to the merger,” an analyst with a Mumbai-based brokerage who did not wish to be identified, told Reuters news agency earlier today.
As both parties await completion of the proposed merger, some analysts are predicting that market conditions in India could be poised to improve.
"The impending merger of Vodafone and Idea, and the ensuing integration of the two may see some erosion of subscribers, giving an opportunity to other operators. Thus, we expect that a stable industry structure, with three operators holding more than 90% of the market share, to coincide with the stabilization of Vodafone-Idea merger. Till such time, the pricing levels in the industry are unlikely to witness material improvement," Harsh Jagnani, sector head and VP for Corporate Ratings at the ICRA, told the Economic Times of India in a recent interview.
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