Idea Cellular Ltd and Vodafone are reportedly planning to invest Rs. 60,000 crore in telecom infrastructure. The investment will apparently be spread out over a span of three years to expand and facilitate vertical growth.
As the two companies work towards completing their merger, this investment is meant to meet India's data demands. The merged entity between Vodafone and Idea will be the largest telco in India.
Previous reports have incicated how India, currently, has the slowest 4G speeds in the world, even though 4G coverage is available in 86.26% regions. While demand for data has been growing steadily, it's expected to see a massive surge in future.
Telecom data wars
The investment comes as no shocker after most of the existing teleco’s in the industry are facing tough competition from Reliance Jio since 2016, having triggered an intense price war.
The Cellular Operators Association of India (COAI) even issued a statement in claiming that the recent Telecom Regulatory Authority of India (TRAI) regulations have been squarely in favour of one operator while placing the rest at a disadvantage.
Furthermore, Airtel had already announced a similar investment to expand its network back in 2015. Project Leap, as it was called, was expected to be major factor in improving the network quality of the company.
Even Jio made an investment of Rs 1.5 trillion (Rs. 1500 crore) to set up its telecom infrastructure when it initially launched into the market. This included setting up towers, connecting fiber optic cables and purchasing spectrum.
A merger in progress
The $23-million merger isn’t only a big deal because it will combine the companies in name and volume, but also because it will generate synergy that will boost what the companies would’ve been capable of individually.
It is expected that things will be final before 31 March. They have already received a go ahead from the National Company Law Tribunal (NCLT), the Security Exchange Board of India (SEBI), and the Company Commission of India (CCI). All that is left is the vote of approval from the Department of Telecommunications (DoT).