Idea-Vodafone merger creates India's largest telecom operator

Back in January 2017, Vodafone India confirmed that it was in merger talks with Aditya Birla Group's telecom arm Idea Celluar. Today Idea Cellular's board has given the green signal for the merger with Vodafone India and its wholly owned subsidiary Vodafone India Mobile services (VMSL).

The combined entity will create the country's largest telecom entity taking 43 percent share of the market with around 400 million subscribers, surpassing Bharti Airtel. Prior to the merger, Vodafone and Idea Cellular were the second and third largest telecom players in the country respectively, while Bharti Airtel was sitting on the top.

According to the press release, Vodafone India will own 45.1 percent in the combined entity after transferring  a stake of 4.9 percent to the promoters of the Idea Cellular for Rs. 38.74 billion in cash after the completion of the merger. The Promoters of Idea Group will have 26 percent market share in the entity, while the balance 28.9 percent will be owned by the public.

Once the deal is through, the entire business of VIL and VMSL, excluding VIL’s investment in Indus Towers, international network assets and IT platforms, will vest in Idea. Aditya Birla Group chairman Kumar Mangalam Birla will become the chairman of the new entity.

The merger is expected to be completed in 2018 and the transactions is subject to necessary approvals from concerned authorities, which include shareholders, creditors, SEBI, Stock Exchanges, the Competition Commission of India, the Department of Telecommunications (DoT), the Foreign Investment Promotion Board, the Reserve Bank of India and other governmental authorities.