Idea cellular and British Telecom company Vodafone today announced a merger, that will create India’s biggest telecom operator. This merger will create 40 crore customer for Idea and Vodafone India which is one in every three person. This combined entity of Idea Cellular and Vodafone India will now have the widest network in the country.
The entry of Reliance Jio has spurred a consolidation in the whole Indian telecom sector causing Telenor to shut down its operation and leave the country. Analysts say that the new combined entity of Vodafone India and Idea Cellular will be in a better position to compete with Bharti Airtel and Reliance Jio.
Vodafone and Idea anticipate the merger to complete next year.
10 Things That Will Happen In Idea Cellular and Vodafone India Merger
- Vodafone will now own 45.1% of merged entity, after it transfers about 4.9% to the promoters of Idea and/or their affiliates for Rs. 3,874 crore in cash, Idea said in its statement.
2. The deal doesn’t includes Vodafone’s 42% stake in telecom tower company Indus Towers.
3. Promoter of Idea Cellular will have the sole right to appoint chairman of the merged entity.
4. Aditya Birla group will own 26% of the entire entity also they will have the right to acquire further shares from Vodafone under a certain mechanism with a view to equalizing shareholdings over time.
5. Reliance Communications has already entered into an agreement to merge its wireless business with rival Aircel.
6. Bharti Airtel had earlier this year announced an agreement to buy Norwegian company Telenor’s operations in six Indian states.
7. Share of Idea rose by 14.25% immediately after the merger news but later gave up some gains.
ET had reported that Vodafone CEO Vittorio Colao will come India this week to discuss the key issues regarding the merger.