Vodafone India Merger with Idea Cellular Creates Country's Biggest Telecoms Business

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Vodafone India Merger with Idea Cellular Creates Country's Biggest Telecoms Business

The merger of Vodafone and Idea Cellular will not threaten jobs of employees working in Vodafone India, Vodafone Group CEO, Vittorio Colao has assured.

"The Aditya Birla Group has the right to acquire up to a 9.5% additional stake from Vodafone under an agreed mechanism with a view to equalising the shareholdings over time".

Vodafone, the world's second-largest cellphone operator, will own 45.1 percent of the merged entity, after it transfers about 4.9 percent to promoters of Idea and/or their affiliates for 38.74 billion rupees ($592.15 million) in cash, Idea said. "The promoters of Idea will hold 26 per cent of the company and the balance will be held by the public", the statement said.

In a BSE filing Idea said, "The board of directors at its meeting held on March 20, 2017, have approved the scheme of amalgamation of Vodafone India Limited (VIL) and its wholly owned subsidiary Vodafone Mobile Services Limited (VMIL) with the company subject to necessary approvals".

Airtel, with a market share of 23.58 per cent and a customer base of 265.85 million, leads the market both in terms of revenue and customer base.

"The combined company would become the leading communications provider in India with nearly 400 million customers, 35 per cent customer market share and 41 per cent revenue market share", it added.

The combined venture will account for over 25 per cent of the allocated spectrum and will have to sell about 1 per cent (worth Rs 5,400 crore) to comply with spectrum cap norms.

Once the merger is complete, the entire business of Vodafone India and Vodaone Mobile Services - excluding Indus Towers' investment, worldwide assets and IT platforms - will vest in the company.

"The combined entity will become the leading challenger with the scale to compete more effectively", Idea said in the statement.

He also ruled out any major downsizing at Idea post merger.

The company said that the amalgamation will result in creation of India's largest telecom company with widest mobile network in the country with pan 3G/4G footprint.

Vodafone will keep its 42 per cent consideration in Indus Towers out of the merger process.

The merger will create an entity with over Rs 80,000 crore revenue. Idea Cellular has a net worth of Rs 24,296 crore and turnover of Rs 36,000 crore.

"We will have the opportunity to create a very strong management team, thanks to the combined expertise of both companies, Colao added".

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