As Vodafone and Idea are set to merge, Bharti Airtel is ready to take advantage of the hurdles of regulations the merger faces. It aims to create country’s largest cellular network with more than 380 million users.
According to Telecom Regulatory Authority of India, an operator accounts for maximum of 50% revenue share, 50% subscriber share and 50% spectrum share in each band in each circle.
The combined entity exceeds 50% subscriber and revenue market limit in six license areas. The six areas include Gujarat, Haryana, Kerala, Madhya Pradesh, Maharashtra and Uttar Pradesh (West). Therefore,they have to sacrifice these market customers to Airtel. Further, Bharti Airtel plans to target the customers in these areas with a series of innovative schemes and tariff plans. In addition, it is necessary for to airtel to keep its market stable.
The subscriber base of merger is roughly around 382.2 million as against 262.3 million of Airtel. It represents 35.4% of the subscribers in India as against 24.3% of Airtel.
The revenue market share of merger is roughly around 42% which is more than airtel’s 32.8%. The merged entity to decrease its market share in the six areas where it has more than 50% market share. These six areas together account for about 41% of the revenues of the combined entity. In addition, decreasing the market share eliminates 8% revenue to fulfill the regulatory requirements.
Airtel prefers for delay in the merger as it gives a time gap to fill the revenue leakages arising out of merger. Bharti airtel, India’s largest telecom carrier reported an annual revenue of Rs 50,008 crore in last fiscal year. The merger entity will create total revenue of Rs 78,000 crore. Therefore, Airtel is ready to take the advantage of this merger by luring the rival’s customer with new schemes.
