Tahlka News Desk
New Delhi: Idea Cellular and Vodafone India ltd have announced their merge and their respective boards have approved their merger both companies will have equal stake in the merged entity, over a period of time. Kumar Mangalam Birla will be the new chairman of the merged entity.
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.
Vodafone will own 45.1 per cent of the merged entity, after it transfers about 4.9 per cent to promoters of Idea for Rs. 3,874 crore in cash, Idea said. The deal excludes Vodafone's 42 per cent stake in telecom tower company Indus Towers.
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.
The merger of Vodafone India (the second largest telecom operator in India) and Number 3 player Idea Cellular will create India's largest telecom operator with around 40 crore customers or nearly one in every three customers in the country. The combined entity of Aditya Birla group's Idea Cellular and Vodafone India will have the widest network in the country and pan India 3G/4G footprint, the companies said in a statement. Currently, Bharti Airtel is the biggest telecom player in India. The entry of Reliance Jio has spurred a consolidation in the Indian telecom sector. Analysts say that the combined entity of Vodafone India and Idea Cellular will be in a better position to compete with Reliance Jio and Bharti Airtel.
"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.