Jio Impact: Merger Race Begins For Idea, Vodafone, Aircel And Others

The year 2017 is all set up to experience some of the best mergers in the field of telecommunication networks. In order to compete with the exponential rising of the number of Reliance Jio users, different telecommunication operators are merging up. The two most important mergers are creating breaking news all over the news channel these days. Although nothing is announced yet, still there are speculations regarding the merger of Vodafone- Idea and R-com, Aircel and MTS.

• Did Reliance Jio Pose Any Threat To The Well Established Telecom Operators?

Reliance Jio is the newest telecom operator till now. Since its launch in the month of September, 2016, the number of customers kept on increasing. This was mainly due to the Welcome offer given by the Jio team. We know that as far as Indian customers are concerned, they will take everything that is given free to them. Well, in this case, Reliance Jio gave free internet and that too, 4G, with the limit of 4GB consumption each day. This was obvious that the number of customers subscribing to Reliance Jio will increase.

After testing the initial phase of the launch of Reliance Jio, the company had set the target of achieving 100 million customers. Till now, it has already crossed 100.7 million customers. After the Jio Welcome offer, the Reliance Jio team introduced the Happy New Year offer. This was done to make sure that the number of Jio operators kept on increasing.  Indeed, it did. Other telecom operators filed complaints that Reliance Jio was nominating the norms of the Telecommunication space. What happened then? Well, we all know that after the launch of Jio itself, we had several new offers from other telecom operators, such as free roaming, free voice calls, etc.

• Main Motive behind the Two Mergers:

As far as my opinion is considered, in order to overcome the Reliance Jio effect, the various telecom operators decided to get merged. After March 31, that is, after the day Reliance Jio Happy New Year offer ends, the customers will have to pay for the data used. Because of this, there is a possibility that the number of Jio customers will decrease. In order to avoid mass exodus, there is a conjecture that Jio will be offering data plans for as low as Rs. 100 per month post March 31. This can further act as a threat to the existing and well established telecom operators. Hence the main motive behind these two mergers is to give a real competition to Reliance Jio and to remain a player in the market.

• Emergence of the Largest Telecom Company with the Vodafone-Idea Merger:

There is a possible merger of Vodafone and Idea that could take place within this month. Vodafone, a British telecom giant is expected to merge with the Idea Cellular, which belongs to a firm of India’s Aditya Birla group. Vodafone and Idea ranks second and third respectively in terms of the number of subscribers. While Vodafone has 200.15 million subscribers, Idea at the same time has 192.4 million subscribers. If this deal is sealed, we will get the largest telecommunication company in India, which will account to an approximate 50% of the total market share. Instead of individual fights against Reliance Jio, they are proposing to tackle this problem by merging themselves.

• Not to Forget About the Tata Teleservices Merger with RCom-Aircel and MTS Entity:

Many news report says that Anil Ambani had approached N. Chandrasekaran to discuss about the possible merger. N. Chandrasekaran is the new chairman of the Tata Son groups. If this merger is successful, then RCom will result in a joint entity of a total of four telecom operators. It will have around 260 million subscribers, with a revenue share of 18%. It will also become the country’s third largest telecom operators, after the Vodafone-Idea merged entity and Airtel.