On Monday, Idea Cellular and the Indian unit of British telecom company Vodafone announced a merger, creating the country’s largest telecom operator. Both companies will have equal stake in the merged entity, over a period of time, said the respective chiefs.
The merger will exclude Vodafone’s 42% stake in Indus Towers Ltd, to create India’s largest telecom company with a total revenue of over Rs 80,000 crore.
PTI has reported that Kumar Mangalam Birla will be the new chairman of the merged entity, while Vodafone will appoint the CFO.
Post the amalgamation, Vodafone will hold 45 percent in the combined entity while Idea promoters will hold 26 percent share. The rest will be held by public. The Aditya Birla Group will have the right to buy 9.5 percent stake in the entity at Rs 130 per share.
“The promoters of Idea have the right to acquire up to a 9.5% additional stake in from Vodafone if Vodafone and the promoters of Idea do not have equal shareholding by the expiry of the fourth year from the completion of amalgamation, Vodafone is obliged to reduce its holding in order to equalise its ownership with that of the promoters of Idea over the following five years,” Idea Cellular said in a statement.
“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.
Idea Cellular in a regulatory filing on Monday said, its Board of Directors “have approved the scheme of amalgamation of Vodafone India Limited and its wholly owned subsidiary Vodafone Mobile Service Limited with the company (Idea).”
“The combination of Vodafone India and Idea will create a new champion of Digital India founded with a long-term commitment and vision to bring world-class 4G networks to villages, towns and cities across India,” said Vittorio Colao, Chief Executive, Vodafone Group Plc.
“The combined company will have the scale required to ensue 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 of every Indian,” he added.
The combined company would become the leading communications provider in India with almost 400 million customers, 35% customer market share and 41% revenue market share. The brand strategy of the combined company will be developed in due course. The name of the new merged company will also be decided in due course.
Vodafone and Idea anticipate that completion will take place during the 2018 calendar year.
I am pleased and honoured to be the chairman of the new company: Kumar Mangalam Birla after Vodafone India-IDEA merger (file pic) pic.twitter.com/p7csrklCuz
— ANI (@ANI_news) 20 March 2017