Vittorio Colao, KM Birla expect Vodafone-Idea merger to be completed in 2018

Industry:    2017-07-26

A day after competition regulator gave its nod to the Idea Cellular and Vodafone merger, Kumar Mangalam Birla, chairman of Idea Cellular and Vittorio Colao, chief executive, Vodafone Group in a joint statement Tuesday said they expect the merger between the two companies to be completed in 2018.

“We welcome the decision of the Competition Commission of India approving the proposed merger of Vodafone India and Idea Cellular, following its comprehensive review of the transaction. It is expected that other statutory approvals will be forthcoming and we anticipate completing the transaction during 2018,” stated the heads of the two telecom firms in their statement.

Approvals from Securities & Exchange Board of India (Sebi) and National Company Law Tribunal (NCLT) are still pending.

The competition commission of India’s (CCI) approval was a key step in paving way for creation of India’s largest telecom company by subscribers. UK-based Vodafone Group Plc’s India unit and Idea, ranked at two and three, respectively, will have almost 400 million customers and a 41% revenue market share when they merge.

The combined entity, with its scale, size and synergies, will be a stronger rival to Reliance Jio Infocomm, which disrupted the market with free voice and data offers for about six months after it started services in September.

The Aditya Birla Group, the promoters of Idea, will gradually increase its stake in the combined entity, while Vodafone Group will reduce its holdings, with both partners eventually owning equal stakes.

“The proposed combination of Vodafone India and Idea will create a new champion of Digital India. We remain fully committed to fulfilling the Digital India vision of the Honourable Prime Minister and the government and will connect villages, towns and cities across India with world class 4G/4G+ networks. The continuing ease of doing business in the country helps ensure that this vision for a digitally connected India is fast becoming a reality,” the statement added.

According to the proposed deal structure, Vodafone will initially hold a 50% stake in the combined entity, while the Aditya Birla Group and public shareholders will hold 21.1% and 28.9%, respectively. Vodafone will divest a 4.9% stake to the Birla group, which would increase its stake to 26%, thus crossing the threshold for an open offer.

The takeover code stipulates that if an entity acquires 25% of a listed company, it has to make an open offer for an additional 26% from public shareholders. Vodafone and the Birla group announced in March that Kumar Birla would be chairman of the new entity.

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