Vodafone, Idea announce merger

The U.K.’s Vodafone and Aditya Birla group firm Idea Cellular on Monday announced that they have kickstarted a mega merger deal.

Vodafone will own 45.1% of the merged entity, after it transfers about 4.9% to promoters of Idea and/or their affiliates for ₹38.74 billion rupees, Idea said. Idea will have the sole right to appoint the chairman.

Shares in Idea rose as much as 14.25% immediately after the merger news but gave up gains to be trading up 3.8%.

Vodafone and Idea began talks for a possible merger in late January this year.

The combined market share of both the telecos add up to 43%, making it the largest telecom firm, surpassing Bharti Airtel. The merger will create an entity with a revenue of around ₹77,500-80,000 crore besides eliminating duplication of spectrum and infrastructure capex, according to India Ratings and Research.

The spectrum of Vodafone India in seven circles and that of Idea in two, whose permits are expiring in 2021-22, is together valued at around ₹12,000 crore as per the last auction price. These permits are not in common circles, and hence there could be potential spectrum capex synergies between the two companies, the report said.