Grasim Industries, an Aditya Birla Group company, on Wednesday, denied rumors that it would be making a large investment into Idea Cellular as part of the proposed merger between Vodafone and the country’s third largest telecom operator.
“Grasim would like to clarify that its knowledge of the proposed Idea-Vodafone transaction is restricted to what has been put out by Idea Cellular in the public domain… the Company denies the rumor that it would be making a large investment into Idea as part of the transaction being contemplated,” Grasim Industries informed BSE.
Grasim Industries owns 4.75 per cent share in Idea Cellular, as on December 2016.
“Regrettably, some of the investors/analysts have raised concerns that to take this process forward, large investments would be made by Grasim into Idea, fuelled by rumors,” Grasim added in its note to BSE. “No such proposal is under evaluation by its Board.”
Idea Cellular had on Monday informed the stock exchanges that it has been in preliminary discussions with Vodafone. The discussions were also confirmed by Vodafone Group Plc and it said that it is in talks to merge its Indian unit with Idea Cellular in an all-share deal.
Ratings agency Fitch on Wednesday said that the proposed merger between Vodafone India and Idea Cellular would help both the telcos withstand intense price competition in the Indian telco market, but is unlikely to lead to increased pricing power for operators in the short term.
The proposed merger will create the country’s largest telecom operator by subscribers with around 390 million users and form one of the largest telecoms companies in the world.
“We estimate the merger would create an entity with 390 million subscribers, a leading revenue market share of around 40%, revenue of USD11bn-12bn, and an EBITDA margin of about 28%-30%,” the agency said in a statement.
Source: Economic Times