Vodafone-Idea combine to outshine Airtel & Jio: Credit Suisse

KOLKATA: A potential merger of Vodafone India and Idea Cellular would make the combined entity the biggest spectrum holder in India and knock off Reliance Jio Infocomm from the top slot on the overall network capacity market share metric, analysts at Credit Suisse said.

According to the Swiss brokerage, if Vodafone and Idea were to merge, the combined entity would have 35% network capacity share, displacing Jio, which would have 31%.

UK's Vodafone Group and the Aditya Birla Group are in talks to merge Vodafone India and Idea in an all-share transaction, in their bid to forge a stronger front to combat Jio, which is owned by India's richest man, Mukesh Ambani.


The merged entity , the brokerage said, would command a 26% spectrum market share and relegate Bharti Air tel to second place on this score. At present, Bharti Airtel leads the industry in terms of spectrum holding with a 21% market share, with Jio at second spot with 17%.

“Individually, Vodafone and Idea appear quite lacking in 3G4G spectrum capabilities, but when combined, the spectrum foorprint looks comparable with Jio and Bharti,“ Credit Suisse said in a note, a copy of which is with ET.

The brokerage, however, said: “Jio would continue to lead in capacity share of data networks by virtue of its large data spectrum holdings and exclusive 4G deployment."

Analysts at Credit Suisse said if the country's No. 2 and No. 3 telcos merge, imbalances in the combined entity's revenue market share (RMS) and network capacity share would continue. It said the merged entity's 35% network capacity share would be significantly behind its envisaged 42% RMS.

“Historically , RMS has had decent correlation with capacity shares, but with the imbalance evident in the above figures, pressure would sustain on incumbents to continue to add capacity at a time when Jio has recently announced expansion plans of its own,“ said the Swiss brokerage.