Idea, Vodafone complete merger to become India’s largest mobile operator

Shiv Kumar

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Tribune News Service

Mumbai, August 31

The USD 23.2 billion (approximately Rs 1.6 lakh crore) merger of Idea and Vodafone has finally been completed creating India’s largest telecom service provider, a statement issued by the merged entity said on Friday morning.

The company, to be called Vodafone Idea Ltd, will have more than 408 million subscribers and a broadband network spread over 3,40,000 sites.

Vodafone Idea Ltd will have 12 directors, including 6 independent directors, with Kumar Mangalam Birla as the Chairman.

According to the statement, the pan-India Revenue Market Share of the merged entity will be 32.2 per cent and a Number One position in nine circles making it India’s biggest telecom operator. It replaces Bharati Airtel at the top spot with Reliance Jio coming third.

The statement added that the company will enjoy India’s largest voice network with over 2,00,000 unique GSM sites to cover over 1.2 billion Indians.

For the moment “both the Vodafone and Idea which have strong consumer affinity across metro, urban, rural and deep interior markets will continue to operate”, the statement added.

According to Vodafone Idea, the merger is expected to generate Rs 140 billion annual  synergy, including opex synergies of Rs 84 billion, equivalent to a net present value of approximately Rs 700 billion.

The equity infusion of Rs 67.5 billion at Idea and Rs 86 billion at Vodafone coupled with monetization of standalone towers of both companies for an enterprise value of Rs 78.5 billion, provides the company a strong cash balance of over Rs 193 billion post payout of Rs 39 billion to the DoT.

Additionally, the Company has an option to monetise an 11.15 per cent stake in Indus, which would equate to a cash consideration of Rs 51 billion.

“Today, we have created India’s leading telecom operator. It is truly a historic moment. And this is much more than just about creating a large business. It is about our Vision of empowering and enabling a New India and meeting the aspirations of the youth of our country,” Birla said in a statement.