Analysis of A Corporate Transaction: Merger of Vodafone India & Idea Cellular
The Indian telecom industry has been in the grip of consolidation ever since the trading of spectrum licenses was legalised in October 2015. In the interest of increasing competition, innovation and facilitating businesses, the Department of Telecommunications (DoT) liberalised the spectrum and allowed telecom companies to transfer their airwaves rights, subject to certain restrictions. Recently, Vodafone and Idea announced a merger that will create India’s largest telecom operator with more than 400 million subscribers and fuel the ongoing market consolidation. The merger will result in Indian telecom sector being dominated by four players- Vodafone-Idea, Bharti Airtel, Jio and BSNL. It will also kick-start the process of renewing price discipline in an industry, which is still reeling under the shock of Jio's disruptive entry. The aim of this paper is to provide a detailed analysis of the Vodafone-Idea mega deal. The following section contains a brief note on the two telecom giants. The third part deals with the contours of the merger. The fourth part provides an analysis of certain legal aspects of the deal and it is followed by a study of the significant commercial elements involved in the transaction. The conclusion sums up the discussion with a note on the potential future trajectory of the new entity.