After Idea Cellular Ltd and Vodafone India Ltd on Monday announced that their respective boards have approved their merger, 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.
In the beginning, Vodafone will be a dominant partner in the merged entity with 45.1% stake after it will transfer a stake of 4.9% to the Aditya Birla group for Rs 3,874 crore in cash to complete the merger. Aditya Birla group will then own 26% 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.
“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.