Aditya Birla Group says no plan to merge Idea with Voda

Group terms a news channel's merger report as `untrue and preposterous'

The Aditya Birla Group on Tuesday refuted a news channel report that said its telecom business Idea Cellular and the local unit of Vodafone were considering a merger deal. “This is absolutely untrue and preposterous,” the conglomerate said in a news release. “There is no such intent. We request you not to be swayed by such motivated feed. Do not lend any credence to it.”

Vodafone India, the country's No 2 telecom company, declined to comment on the report. The channel said the merger was one way of facing the threat from Mukesh Ambani-owned Reliance Jio Infocomm, which is getting ready to launch its telecom services. Jio is expected to unveil its tariff plan in the next few days.

Shares of Idea Cellular closed 6.7% up at Rs.100.80 on the BSE on a day when the benchmark Sensex remained flat.

Analysts said a merger, if it indeed happened, would lead the combined entity to violate market share cap rules in some circles. But some said a merger may make sense to take on competition from Jio. “Regulatory hurdles can be worked out by both companies. If the merger indeed happens, then they will have a 42% market share, which will be slightly more than Bharti Airtel's. One will need adequate spectrum to counter Reliance Jio,” said Naveen Kulkarni, head of research at PhillipCapital India.

Both Vodafone and Idea trail Airtel and Jio by a long way in terms of 4G spectrum holdings. All telecom operators, though have the upcoming spectrum auctions to augment their bandwidth.