As per latest data published by sector regulator Trai, Idea and Vodafone jointly have over 40 crore mobile subscribers and together account for largest share in the Indian telecom segment.
The Vodafone Group’s decision to merge its India unit with the Aditya Birla Group-controlled Idea Cellular is a classic case of two companies recognising truth in the adage that ‘together we can’.
The deal gives Vodafone an implied enterprise value of Rs 82,800 crore and Idea Rs 72,200 crore. The merged entity will counter the telecom leaders Jio and Bharti Airtel which has vast market share in terms of subscribers.
As per the deal, Vodafone will hold a 45.1 per cent stake in the merged entity, the Aditya Birla Group will hold 26 per cent after paying Rs 3,874 crore cash for a 4.9 per cent stake and the remaining 28.9 per cent will be held by the public. Vodafone’s 42 per cent stake in Indus Towers Ltd (provides infrastructure services to telecom operators) will not be included in the merger.
The merger deal, which was expected to be sealed by March 2019 (with the name of the joint entity to be announced later), is now likely to close as early as March-April 2018, according to American Bank Meryl Lynch. According to an Economic Times report dated December 13, 2017. Ericsson, Nokia and Huawei will be involved in integrating the process and will be the network gear suppliers to both firms.
For the merger, the two companies first approached the approval of Competition Commission of India. On July 24 last year, the CCI gave its approval to the merger.
On October 13, shareholders of Idea Cellular gave their approval. Over 99 per cent of Idea shareholders voted in favour of the merger at the shareholders’ meeting on October 12, 2017.
Following the shareholders’ approval, the companies sought approval from the National Companies Law Tribunal (NCLT).
Both the groups can now go ahead for the final approval for merger from the Department of Telecom after Vodafone’s appeal for the scheme also gets NCLT nod. In that case, the merger of the two giants can get sealed sooner than anticipated, putting an end to worries over the delay in getting all approvals, given the state of flux the telecom sector is in right now.
