New Delhi, March 20: Aditya Birla group firm Idea Cellular has announced a merger with Vodafone India, to be the biggest telecom operator in India. Both the firms have agreed to have a combined market share of 43%. Kumarmangalam Birla will be the Chairman of merged Vodafone-Idea entity and both the companies will have equal stakes in the merged entity over a period of time.
“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 strength,” said Kumar Mangalam Birla, Chairman, Aditya Birla Group.
According to the merger, Idea-Vodafone has the right to nominate 3 directors each. Both the firms have wide network in the country and pan-India 3G/4G footprint. As per minutes of the meeting held earlier today, Vodafone will hold 45 percent in the combined entity.
Idea promoters will hold 26 percent in the combined entity. Vodafone will own 45.1 percent of the company after transferring a stake to the Promoters of Idea for Rs. 38.74 billion in cash, post completion of the amalgamation.
The merger will facilitate VIL and VMSL's entire business to be vest in the company, excluding VIL's 42 percent share in Indus Towers. The merger will come into effect after new shares are issued in Idea to Vodafone and would result in Vodafone deconsolidating Vodafone India.
The merger is said to increase competition in the telecom space where players are in a tussle to increase revenue and subscriptions. The two parties believe that the merger will enhance pan India 3G/4G footprint, thereby accelerating the Narendra Modi-Government's 'Digital India' initiative. Furthermore, it is believed to help in leveraging customer affinity towards the two brands in the telecom spectrum.