M&A regulations suggest the resultant merged entity should reduce its revenue market share to the limit of 50% within one year from approval. We note there are six markets in which the Idea- Vodafone combination would exceed 50% revenue market share. However, with Jio's entry, some market share loss would be likely to occur regardless; hence, we do not view this as a major deterrent.
M&A rules say that a merged entity should not exceed 50% of spectrum assigned in any single band. Our analysis suggests the mooted merged entity may have to surrender c12.8MHz of 900 spectrum worth cUSD1bn. However, any such surrender could be avoided by trading the excess spectrum.
There is a possibility that Idea-Vodafone combined may be asked to pay USD200-350m on account of spectrum liberalisation charges. Separately, potential synergies may primarily accrue from savings in network and employee cost. Further, the mooted merged entity may end up with a robust pan-India data spectrum profile and have the ability to add more data 4G spectrum