Deal Street

March 21, 2017

Idea Agrees To Merge With Vodafone India, Creating Largest Telecom Operator In India

idea, vodafone

On March 20, Idea Cellular agreed to merge with the Indian unit of Vodafone Plc, thus becoming the largest mobile telephony and data service provider in India with 39.25 crore customers.

Vodafone and Idea released a joint statement saying that the merged entity will have a 35% customer market share and 41% revenue market share. Moreover, they said that the brand strategy for the merged entity “will be developed in due course” and “will leverage customers’ affinity for both existing brands built up over the past decade.” The chairperson of the merged entity will be Kumar Mangalam Birla.

As the first step of the merger, Idea and Vodafone would merge their operations at a swap ratio of 1:1. Then, Birla’s holding companies would buy a 4.9% stake from Vodafone at Rs 110 per share, investing nearly Rs 3,900 crores, which will increase Idea’s stake to 26% and decrease Vodafone Plc’s stake to 45.1%. Notably, the Birlas would have the right to acquire another 9.5% stake from Vodafone at Rs 130 per share in the next four years, so that both partners eventually hold equal stake in the company (about 35.5% each).

Rajan Mathews, Director General of the Cellular Operators Association of India, said, “There is currently a tariff war in the market which may not be sustainable for long. This has also severely impacted the revenue stream of operators not just in terms of an increase in cost but also in terms of a marked decline in the revenue stream. All these have put the financial condition of this industry at risk and increased the debt to Rs 4.3 lakh crores, also leading to a severe decline in government revenues from the industry.”

Aditya Birla Group Chairperson Kumar Mangalam Birla said, “For Idea shareholders and lenders who have supported us thus far, this transaction is highly accretive, and Idea and Vodafone will together create a very valuable company given our complementary strengths.”

Related Post

latest News

  • SC approves sale of Binani Cement to UltraTech, upholds NCLAT order

    On November 19, upholding National Company Law Appellate Tribunal’s (NCLAT) order, a Supreme Court bench of Justices Rohinton F Nariman and Navin Si...

    Read More
  • Rent From Sub-Letting Warehouse For Commercial Purposes Is ‘Other Income’, Rules Income Tax Appellate Tribunal

    All income received by any individual or company by sub-letting a warehouse for any commercial purpose is liable to be taxed as “income from other s...

    Read More
  • Bombay High Court Directs Maharashtra To Pay Rs 10 Lakh To Parents For Negligent Police Probe Into Daughter’s Death

    The Bombay High Court has directed the Maharashtra state government to pay Rs 10 lakh as compensation to the parents of a minor girl, citing “neglig...

    Read More