Why a merger makes sense for Idea

Idea Cellular’s proposed merger with Vodafone to create the country’s largest mobile operator comes as a shot in the arm for the Aditya Birla Group. The venture is a financial drain on group finances, with a steady rise in Idea’s indebtedness and declining profitability. Idea’s gross debt tripled in the last three years as it scrambled to acquire additional spectrum and roll-out services in new circles to compete with incumbents and Reliance Jio. 

The merged entity will gain access to cheaper overseas capital, thanks to Vodafone, allowing it to compete better with Jio, riding on its parent Reliance Industries’ ability