Monday, August 21st, 2017

Idea Cellular and Vodafone India MERGED!!


idea vodafone merge

Idea cellular has approved to merge with its rivalry Vodafone India Ltd. and Vodafone India Mobile Services and planning to create India’s largest telecom with total 35% customer market share or 400 million customers. The merger is supposed to take place within two years, after approvals from all required entities like shareholders, creditors, SEBI, the telecom department etc. The approval is not subjected from Vodafone group’s shareholders.

The merger is a result of market issues happened after the releasing of JIO 4G. This has affected the market range of all companies in the country forcing them to accept the less profit results.

Vodafone being the majority, will hold 45.1% stake, giving 4.9% to the promoters of idea, Kumar Mangalam Birla and Idea Group will hold 26% and the rest will be held by public.

“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,” said Aditya Birla Group Chairman, Kumar Mangalam Birla.

Vodafone Group Plc Chief Executive, Vittorio Colao said, “The combined company will have the scale required to ensure 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 for every Indian.”

“We look forward to working with the Aditya Birla Group to create value for all stakeholders.”

Talking about the contribution, Idea Cellular will contribute net debt of Rs 52,700 crore whereas Vodafone India will contribute Rs 55,200 crore of net debt for the merger.

The merging statement included the decision making power for both the companies, stating:

  • Right to nominate 3-3 directors each into the board of 12, 6 will be independent.
  • Idea will nominate the chairman, CFO by Vodafone.
  • CEO and CFO by joint decision making.

Idea has got priority over some circumstances, including:

  • Promoters have the right to acquire 9.5% extra stake from Vodafone for equalizing the shareholding overtime.
  • If at the end of 4th year, both companies don’t have equal shares, Vodafone has to reduce its ownership over the 5th
  • Until shares get equal, Vodafone’s additional shares will be restricted and decision will be held jointly.

The merger is expected to be a really different and positive step for the Indian cellular world. The merging companies are planning to create the India’s largest telecom by coming together. This left Bharti Airtel and Jio fight for the place to be the second largest.


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