NEW DELHI: The much-awaited merger between two leading telecom operators — Idea Cellular and Vodafone India — was finally completed on Friday. The companies on Friday announced the creation of India’s biggest telecom service provider (TSP) with 408 million subscribers and an all-India revenue market share of 32.2 per cent. The new entity, Vodafone Idea Limited, took over the numero uno tag from Bharti Airtel, which has held the position for the last 15 years.
The merger got its last leg of approval from the National Company Law Tribunal (NCLT) late on Thursday. It has already received approval from the Department of Telecom and Competition Commission of India. The amalgamation is also expected to end the consolidation phase in telecom sector and leave people to choose between three private players — Airtel, Vodafone India and Jio — and public player BSNL.
In the last two years, the number of TSPs in India has come down from nearly a dozen to four, mainly due to disruption caused in the sector by Mukesh Amabani’s Reliance Jio. Telecom analysts believe that the new firm would be in a better position to fight the ongoing tariff war, increase its subscriber base and cut down debts. “The merger is expected to generate Rs14,000 crore annual synergy, including opex synergies of Rs 8,400 crore, equivalent to a net present value of approximately Rs 70,000 crore,” a statement by the two companies said.
The net debt of the company stood at Rs 1,09,200 crore on June 30, 2018. The combined entity will have a broadband network of 3.4 lakh sites and distribution network with 17 lakh retail outlets. Vodafone Idea Ltd also keeps an option to monetise over 11 per cent stake in Indus (the tower company), amounting to a cash consideration of Rs 5,100 crore. Kumar Mangalam Birla would be the chairman of combined entity and Balesh Sharma the CEO. While Vodafone Group owns 45.2 per cent stake in the new company, Aditya Birla Group has 26 per cent stake, both on fully diluted basis.