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Vodafone Combines India Unit With Idea Cellular As Competition Heats Up

With technology companies and telecom players battling it out for supremacy in India, the market just got more competitive after Vodafone, a U.K. carrier, announced it was combining its India unit with Idea Cellular, the operator based in India.

According to a report in The New York Times, the deal is valued a $23 billion and creates one of the biggest cellphone providers in the world with about 400 million subscribers in India alone. Under the terms of the deal, Vodafone and Idea are merging their operators and, combined, will control 35 percent of the market. The Times reported the companies said the deal will enable them to invest more quickly in speedier mobile networks around the country. Those networks will be necessary for streaming movies and watching TV shows via a smartphone.

In recent years, the number of smartphone users in the country has exploded, thanks to low-cost devices. That has resulted in Indian consumers embracing online services in a big way, creating the next bastion of growth for tech and telecom players. But Vodafone isn’t the only company eyeing the Indian telecom market. The Times reported Reliance Industries, an Indian oil conglomerate, is investing billions of dollars into Jio, a smartphone startup that offers free data and voice plans to Indian residents.

Meanwhile, Bharti Airtel agreed in February to purchase the Indian assets of Telenor, a Norwegian operator.

“Consolidation in the Indian market is the name of the game,” said Rishi Tejpal, an analyst in Gurgaon, India, for Gartner, a technology research company in the report. “The survival of 10 to 12 local operators isn’t a long-term reality.”

The report noted many telecom operators in India are trying to get Indians to invest in smartphones that can support mobile data.

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