NCLT clears path for Vodafone India and Idea Cellular merger

Mumbai, September 1: Finally the merger of Vodafone India and Idea Cellular has been cleared by National Company Law Tribunal (NCLT), paving the way for the creation of India's largest telecom operator worth over 23 billion US dollar with a 35 percent market share.

 

After the merger, the current market leader Bharti Airtel will be dislodged from the pole position, by its sheer size and scale. The government had approved on 26th July the merger of Vodafone India and Idea after the two firms provided for over 7,248 crore rupees as one-time spectrum charge.

In July, Telecom Ministry has put a condition for this merge that Idea Cellular and Vodafone India can merge but the companies need to complete some formalities for the final closure of the deal. Telecom Minister Manoj Sinha had said, “The Government has approved this merger.”

The combined operations of Idea and Vodafone will create the country's largest telecom operator worth over 1.5 lakh crore rupees, with a 35 percent market share and a subscriber base of around 430 million. Debt-ridden firms Idea and Vodafone India are in process of merging their businesses in India as it is expected to bring down the cost of their operations and give them relief from cut-throat competition in the market where margins have hit rock bottom with free voice calls.

 

With the new entity coming in force, Bharti Airtel will lose the tag of India's biggest telecom service provider to the new entity. The combined debt of both the companies is estimated to be around Rs 1.15 lakh crore.

The two companies decided to merge their business after the sector witnessed a huge tariff war and reduction in margins with the entry of new telecom operator Reliance Jio.