India’s Idea Cellular Ltd and Vodafone India Ltd on Monday announced that their respective boards have approved their merger, a move that will create the country's biggest telecom services provider with a customer base of over 394 million.
The board of directors of Idea Cellular at its meeting held on Monday approved the “scheme of amalgamation of Vodafone India Limited (VIL) and its wholly owned subsidiary Vodafone Mobile Services Limited (VMSL) with the company”, Idea said in a regulatory filing.
In the beginning, Vodafone will be a dominant partner in the merged entity with 45.1 percent stake after it will transfer a stake of 4.9 percent to the Aditya Birla group for Rs 3,874 crore in cash to complete the merger. Aditya Birla group will then own 26 percent stake in the company but it will have the right to acquire more shares from Vodafone under an agreed mechanism with a view to equalize the shareholding over time.
The transaction is subject to necessary approvals from concerned authorities, including SEBI, Department of Telecom, RBI etc.
Kumar Mangalam Birla, said, “This landmark combination will enable the Aditya Birla group to create a high quality digital infrastructure that will transition the Indian population towards a digital lifestyle and make the government’s Digital India vision a reality. 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.”
Vodafone Group Plc chief executive officer, Vittorio Colao, said, “The combined company will have the scale required to ensure sustainable consumer choice in a competitive market and to expand new technologies—such as mobile money services—that have the potential to transform daily life for every Indian. We look forward to working with the Aditya Birla Group to create value for all stakeholders.
“Upon the amalgamation becoming effective, the entire business of VIL and VMSL, excluding VIL's investment in Indus Towers Limited, its international network assets and information technology platforms, will vest in the company,” the company filing said.
The turnover of Vodafone India is INR 5,025 crore and of VMSL is 40,378 crore. Idea Cellular's turnover is INR 36,000 crore.
The net worth of VIL is 12,855 crore, VMSL's 3,737 crore and of Idea Cellular is INR 24,296 crore, as per the filing.
Vodafone's market share was 18.16 percent with 204.68 million mobile customers and that of Idea was 16.9 per cent with 190.51 million at the end of December 2016, as per the Trai data.
At present, Airtel with a market share of 23.58 percent and a customer base of 265.85 million is the country's largest telecom player.