With around 88 million 3G or 4G subscribers under its belt at the end of the December 2017 quarter, the Idea-Vodafone combine is no walkover in the mobile broadband sweepstakes.
But, it’s not all about data. The combine, which is expected to complete its merger by the first half of this year, also has over 300 million 2G subscribers who competitors are aggressively trying to nibble away. Jio recently dropped tariffs once again, and Airtel CEO Gopal Vittal said it would grab market share from the Idea-Vodafone combine.
The combine saw its subscriber market share fall from 36.15% in September last to 34.84% in November. Vittorio Colao, CEO of Vodafone Plc, has justified the reduction, citing the need of the merged entity to have subscriber or revenue market share in any given circle under 50% under competition rules.
According to CLSA, the combine has strong data spectrum in nine circles forming over 55% of its revenues. If Idea-Vodafone’s market share in the remaining circles even halves, it will loose only 10% revenue share. Based on their long-term assessment, the merged entity’s revenue market share will fall from 42% in FY17 to around 35% in FY18 and be neck and neck with Jio in FY20 with 32% each (Bharti will be at 30%).
Idea-Vodafone is pushing its coverage of 4G across the country. Those involved in the merger point out that after the announcement of the merger, the two have added over 70,000 unique towers, primarily in 3G/4G, across the country. As a result, they say, the merged entity has over 450,000 towers, out of which more than half are 4G-enabled.
Executives say it would also not require any major rationalisation of its combined 21,000 employees. “We expect an attrition of 15%, as we are not replacing those posts with new employees as the process of merger will take more than a year. So, the restructuring of employees would be limited as we will need them for a much larger network,” said an executive.