Published: Mon, March 20, 2017
Electronics | By Jesus Weaver

Idea-Vodafone Announced Merger, All You Need To Know

Idea-Vodafone Announced Merger, All You Need To Know

As per the agreement, promoters of Idea have the right to acquire up to a 9.5% additional stake from Vodafone with a view to equalize shareholding.

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. "This landmark combination will enable the Aditya Birla group to create a high quality digital infrastructure that will transition the Indian population towards a digital lifestyle and make the government's Digital India vision a reality".

With this merger, the new telecom entity has become the largest telecom network in the country.

The merger is expected to be completed next year, subject to regulatory approvals.

Board positions: Promoters of Idea and Vodafone have the right to nominate 3 directors each.

Shares in Idea rose as much as 14.25 percent immediately after the merger news but gave up gains to be trading up 3.8%.

"Vodafone will own 45.1 per cent of the combined company after transferring 4.9 per cent to Idea's promoters or its affiliates for Rs 38.74 lakh crore in cash concurrent".

"The Board of Directors believes that the proposed amalgamation will result in creation of India's largest telecom operator with widest mobile network in the country and pan-India 3G/4G footprint", the filing said.

The British telecom giant will have the right to reduce its holding after four years.

The merged entity's subscriber base will be over 380 million or 37 percent of the industry, compared to Airtel's 262 million, while the revenue market share will be around 30 percent as same as Airtle's. In the process of integration and combining the two big operations, they might lose some revenue market share to Jio or to other incumbents. Idea will have its nominee as chairman whereas CFO will be put forth from Vodafone. Post-closing, combined company will be reported as a JV by Vodafone and accounted for under equity method.

The Aditya Birla group owns 42.2 per cent of Idea while Malaysian carrier Axiata Group Bhd has a 19.8 per cent stake. The name of the combined listed company will be changed in due course, Idea said in a statement.

The combined entity emerges as the market leader in terms of wireless subscribers, taking on rivals such as Airtel and Reliance Jio.

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