A merger between Vodafone and Idea would be good for the telecom sector but Reliance Jio will continue to thrive, Hemant Kanawala of Kotak Mahindra Old Mutual Life said on Monday.
In what will create India's largest telecom company with revenues of over Rs 80,000 crore, Vodafone Plc on Monday said that it is in exploratory discussions with the Aditya Birla group's telecom arm Idea Cellular for a merger.
Speaking to CNBC-TV18, Kanawala said that while consolidation will help the sector as a whole, Mukesh Ambani-led Reliance Jio would remain aggressive till it achieves its targeted market share.
He said it remained to be seen if the merger would be allowed because of the combined revenue market share of the two giants would exceed the mandated 50 percent in certain circles.The latest entrant in the telecom sector, Reliance Jio, is fast acquiring subscribers on the back of free voice and data services under its Happy New Year offer. Reliance Industries’ telecom subsidiary Jio acquired 72.4 million subscribers in the four months of commencement of services.
On the 2017-18 Union Budget to be announced on Wednesday, Kanawala said the focus would be on fiscal consolidation as it would have broader implications on the economy in terms of inflation and interest rates.
He said the government needed to take measures to kickstart private investment, which was currently weak.
Kanawala said the Budget would only have a short-term effect on the markets and it would be earnings that will drive Dalal Street. He said that while third earnings of most companies were positive, India is a laggard in inflows in the emerging market.
Kanawala also said that he expected a change in the corporate tax rate, with a cut to 25 percent in the next two to three years.Disclosure: Reliance Industries, which owns Jio, also owns Network18, which publishes moneycontrol.com
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