Idea approves merger with Voda
By Express News Service | Published: 21st March 2017 02:06 AM |
CHENNAI / NEW DELHI : The Idea Cellular board on Monday said it has approved the merger of Vodafone India, and wholly owned subsidiary Vodafone Mobile Services, with Idea.
The merger will create the single largest telecom firm in the country, both in terms of revenues and subscribers, with analysts saying it could well take on deep-pocketed Reliance Jio in the ongoing war for the Indian mobile data market.
According to the statement from Idea, Vodafone will hold a 45.1 per cent in the newly merged entity, Idea’s promoters will hold 26 per cent and the Aditya Birla Group will have the right to buy 9.5 per cent of the stake at Rs 130 per share. “Vodafone will own 45.1 percent of the combined company after transferring 4.9 percent to Idea’s promoters or its affiliates for Rs 38.74 lakh crore in cash concurrent... Idea promoters will hold 26.1 percent of the company and the balance will be held by public.”
The combined revenues of the merged entity will be Rs 81,403 crore, making it the single largest in the country. Reports peg the firm’s market share at 40 per cent in terms of active subscriber base, it will account for over 25 per cent of allocated spectrum and will need to sell off about 1 per cent to stay compliant with current spectrum norms.
The merger, while subject to several regulatory approvals, comes at a time when the telecom sector is going through intense competition, with Mukesh Ambani-led Reliance Jio throwing down the gauntlet to established operators. The entry of the Vodafone-Idea behemoth, is only set to ramp up the competition and speed up consolidation.
Meanwhile, the companies said later in the day that Idea and Vodafone both will continue as independent brands in India.
The ongoing arbitration over a tax dispute regarding Vodafone with the Indian government will have no bearing on the merger with Idea. Vodafone Group Chief Executive Vittorio Colao said, “We are very complimentary. Idea is strong where Vodafone is weaker. Vodafone is strong where Idea is weaker.”
Aditya Birla Group chairman Kumar Mangalam Birla also said there will be no significant downsizing after the merger. Birla, the chairman of the combined firm, added that the ABG has invested more than `1 lakh crore in Idea and funding for the merger will come from promoters.
Colao said there will be a lot of efficiency in resource sharing. “We’ll be able to deliver speed in excess of 150 Mbps,” he said.