Idea, Vodafone Sign Off on ‘Equal’ Merger in India

Hey, there welcome Mirchitech. And here i want to share Idea, Vodafone Sign Off on ‘Equal’ Merger in India. In a major breakthrough, Idea Cellular has said its board approved a scheme of amalgamation of Vodafone India and its unit Vodafone Mobile Services with the company, according to reports. The merger of Vodafone the world’s second largest cellphone network operator with the Aditya Birla Group firm  India’s third-largest cellular operator would create a company with around 387 million users and form one of the largest telecoms companies in the world, a report said.

The board of directors of Idea Cellular at its meeting held today approved the “scheme of amalgamation of Vodafone India Limited (VIL) and its wholly owned subsidiary Vodafone Mobile Services Limited (VMSL) with the company”, Idea said in a regulatory filing.

Idea, Vodafone sign off on ‘equal’ merger in India

The transaction is subject to necessary approvals from concerned authorities, including SEBI, Department of Telecom, RBI etc.

Upon the amalgamation becoming effective, the entire business of VIL and VMSL. Excluding VIL’s investment in Indus Towers Limited. Its international network assets and information technology platforms will vest in the company, the filing said. The turnover of Vodafone India is Rs 5,025 crore and of VMSL is 40,378 crore. Idea Cellular’s turnover is Rs 36,000 crore.

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The net worth of VIL is 12,855 crore. VMSL’s 3,737 crore and of Idea Cellular is Rs 24,296 crore, as per the filing. Vodafone’s market share percent with 204.68 million mobile customers and that of Idea was 16.9 percent with 190.51 million at the end of December 2016. As per the Trai data.

Airtel with a market share of 23.58 per cent and a customer base of 265.85 million is the country’s largest telecom player.

Idea Merger with Vodafone

Earlier, Britain’s Vodafone Group had said it is in talks to merge its Indian unit with Idea Cellular in an all share deal to create the country’s largest telecom operator to compete with Reliance Jio that has unleashed a fierce price war. In a statement, the UK based company had said it is in talks with Idea about an all share merger, but the deal under consideration excludes its 42 per cent holding in Indus Towers. A joint venture with Bharti and Idea.

Any merger would be effect through the issue of new shares in Idea to Vodafone and would result in Vodafone de consolidating Vodafone India. The company said. There is no certainty that any transaction will be agreed, nor as to the terms or timing of any transaction.

Since its entry in India in 2007. Vodafone has become number 2 operator in the country. But its journey has been tumultuous as it is locked in a legal battle with the government over a USD 2 billion retrospective tax claim over. Its acquisition of Vodafone India from Hutchison in 2007.

It had written down value of business by 5 billion pound (USD 3.35 billion) late last year. The British firm has pumped in more than USD 7 billion into the India unit. Backed by India’s richest man. Reliance Jio Infocomm is offering free voice calls and data till March and has notched up 74 million users. It has already invested over USD 25 billion and is investing another Rs 30,000 crore (USD 4.8 billion).

The Aditya Birla group owns 42.2 per cent of Idea while Malaysian carrier Axiata Group Bhd has a 19.8 per cent stake.

About idea and Vodafone

During its inception in 1995, Aditya Birla Group, Tata Group and AT&T Wireless each held one-third equity in the company. Following AT & T Wireless’ merger with Cingular Wireless in 2004, Cingular decided to sell its 32.9% stake in Idea.

This stake was bought by the remaining two stakeholders equally. Tata forayed into the cellular market with its own subsidiary, Tata Indicom, a CDMA based mobile provider and in April 2006, Aditya Birla Group announced the acquisition of the 48.18% stake held by Tata Group at INR 40.51 a share amounting to Rs 44.06 billion with 15% of the stake acquired by Aditya Birla Nuvo and the remaining by Birla TMT holdings Private Ltd. both AV Birla family owned companies. Malaysia based Axiata bought a 19.96% stake in the company in 2009.

Idea and Vodafone India announced that their respective boards had approved a merger of the two companies. The merger will not include Vodafone’s 42% stake in Indus Towers Ltd. The merger will create the largest telecom company in India by subscribers and by revenue. Under the terms of the deal. The Vodafone will hold a 45.1% stake in the combined entity. The Aditya Birla Group will hold 26% and the remaining shares will be held by the public.

Idea share price:

Telecom services provider Idea Cellular Ltd rises as much as 14.3 per cent to highest since April 29, 2016

Shares give up most gains and were up 3.4 per cent.

Idea board approves scheme of amalgamation of Vodafone India and its unit Vodafone Mobile Services Ltd with company

Around 40 million shares change hands in early trade, about 1.6 times the 30-day average volume

Up to Friday’s close, stock had risen about 45.8 per cent this year

Conclusion

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