Idea Cellular Ltd and Vodafone Group Plc’s Indian unit are likely to start operating as a single unit from April, two people aware of the matter said.
The two companies, which are currently negotiating one of the most complex mergers in India, will create the world’s second largest and India’s largest telecom operator, surpassing Bharti Airtel Ltd, post completion of the merger process. It will have almost 400 million customers with 35% customer share and 41% revenue market share. It will have a revenue of Rs81,600 crore and an operating profit of Rs24,400 crore.
“If everything goes as per plan, we are looking at the first week of April to start operations as one entity,” said one of the two people cited above on condition of anonymity.
This would also mean that the merger will complete at least three months before the earlier deadline of first half of calendar year 2018.
On Friday, the National Company Law Tribunal (NCLT) approved the proposed merger between Vodafone India Ltd and Idea Cellular.
The two companies now require only the Department of Telecommunications’ (DoT) approval to proceed with the merger, having already received clearance from both the antitrust watchdog Competition Commission of India (CCI) and the Securities and Exchange Board of India (Sebi), in July.
“We expect DoT approval to come in the next 45-60 days,” said the second person aware of the matter.
This person added that once these companies receive DoT nod, they will have to get the new entity registered with the Registrar of Companies.
“Following which, there would be a board meeting that will announce the names of board members,” this person said. Announcement related to the executive management team will also be made in the meantime.
An Idea spokesperson did not respond to an email questionnaire sent on Wednesday.
A Vodafone India spokesperson said that his company has nothing more to add than what it said in November when the company stated it expects to complete the merger in the first half of calendar year 2018.
Vodafone Group and Idea Cellular’s parent Aditya Birla Group in March 2017 announced the merger, aimed at dominating a market that Mukesh Ambani’s Reliance Jio Infocomm Ltd had disrupted with free voice calls and low data prices following its commercial launch in September 2016.
The merger agreement is based on equal rights and equal shareholding between Idea Cellular’s promoters and Vodafone Group.
To achieve this, Vodafone has kept its 42% stake in Indus Towers Ltd, valued at around $5 billion, out of the deal’s purview. It can also contribute Rs2,500 crore more as debt into the merged entity.
Promoters of Idea Cellular Ltd on 4 January said they will invest Rs3,250 crore and the company plans to raise a similar amount to strengthen its balance sheet.
As a result of a change in Idea’s shareholding following the proposed capital raising, Aditya Birla Group and Vodafone agreed that the former will buy a minimum of 2.5% of the merged entity from Vodafone, or such stake as is required in order for it to ultimately own at least 26% of the merged entity, Vodafone said in a statement 4 January.
Since the Idea-Vodafone merger itself is the result of consolidation triggered by a price war started by Jio, it is unlikely that the merged entity will be a price warrior itself.
It will focus on profitability and revenue.
Source: Mint