Government today said there will be no special treatment for Vodafone India and Idea Cellular which have decided to merge and the companies will have to comply with existing norms on spectrum, subscriber and revenue caps.
“They have to comply with the rules...there will be no special treatment,” Telecom Minister Manoj Sinha told reporters.
Sinha further said that there is no fear of cartelisation in the telecom sector in the wake of large number of mergers and acquisitions.
“After consolidation, there will still be 5-6 players in each service area. So, cartelisation is not possible. Also, there are guidelines on revenue cap, subscriber cap and spectrum cap which will ensure a healthy competition. We have taken all precautions”.
Britain’s Vodafone Group will merge its Indian subsidiary with local rival Idea Cellular within two years, Idea announced earlier on March 20.
Vodafone will own 45.1% of the merged entity, after it transfers about 4.9% to promoters of Idea and/or their affiliates for Rs 38.74 billion ($592.15 million) in cash, Idea said, announcing one of the biggest merger in the telecom space.
The combined Vodafone-Idea group would India’s largest telecom operation with almost 400 million customers, or 35% market share.
The merger comes after India’s mobile industry was thrown into turmoil with the launch last year of Reliance Jio Infocomm, the new 4G mobile broadband network built at a cost of more than $20 billion by India’s richest businessman, Mukesh Ambani, as part of his Reliance Industries conglomerate.
Jio has made an impact with free voice calls and cut-price data services, forcing India’s three biggest operators - Bharti Airtel, Vodafone and Idea - to slash prices and accept lower profits.