In a major breakthrough, Idea Cellular has said its board approved scheme of amalgamation of Vodafone India and its unit Vodafone Mobile Services with company, according to reports. The merger of Vodafone — the world’s second-largest cellphone network operator — with the Aditya Birla Group firm — India’s third-largest cellular operator would create a company with around 387 million users and form one of the largest telecoms companies in the world, a report said.
The board of directors of Idea Cellular at its meeting held today approved the “scheme of amalgamation of Vodafone India Limited (VIL) and its wholly owned subsidiary Vodafone Mobile Services Limited (VMSL) with the company”, Idea said in a regulatory filing.
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The transaction is subject to necessary approvals from concerned authorities, including SEBI, Department of Telecom, RBI etc.
“Upon the amalgamation becoming effective, the entire business of VIL and VMSL, excluding VIL’s investment in Indus Towers Limited, its international network assets and information technology platforms, will vest in the company,” the filing said.
The turnover of Vodafone India is Rs 5,025 crore and of VMSL is 40,378 crore. Idea Cellular’s turnover is Rs 36,000 crore.
The net worth of VIL is 12,855 crore, VMSL’s 3,737 crore and of Idea Cellular is Rs 24,296 crore, as per the filing.
Vodafone’s market share was 18.16 per cent with 204.68 million mobile customers and that of Idea was 16.9 per cent with 190.51 million at the end of December 2016, as per the Trai data.
At present, Airtel with a market share of 23.58 per cent and a customer base of 265.85 million is the country’s largest telecom player.
Earlier, Britain’s Vodafone Group had said it is in talks to merge its Indian unit with Idea Cellular in an all-share deal to create the country’s largest telecom operator to compete with Reliance Jio that has unleashed a fierce price war. In a statement, the UK-based company had said it is in talks with Idea about an all-share merger, but the deal under consideration excludes its 42 per cent holding in Indus Towers, a joint venture with Bharti and Idea.
“Any merger would be effected through the issue of new shares in Idea to Vodafone and would result in Vodafone de-consolidating Vodafone India,” the company said. “There is no certainty that any transaction will be agreed, nor as to the terms or timing of any transaction.”
Since its entry in India in 2007, Vodafone has become number 2 operator in the country, but its journey has been tumultuous as it is locked in a legal battle with the government over a USD 2 billion retrospective tax claim over its acquisition of Vodafone India from Hutchison in 2007.
It had written down value of business by 5 billion pound (USD 3.35 billion) late last year. The British firm has pumped in more than USD 7 billion into the India unit.
Backed by India’s richest man, Reliance Jio Infocomm is offering free voice calls and data till March and has notched up 74 million users. It has already invested over USD 25 billion and is investing another Rs 30,000 crore (USD 4.8 billion).
The Aditya Birla group owns 42.2 per cent of Idea while Malaysian carrier Axiata Group Bhd has a 19.8 per cent stake.
Vodafone India Ltd is a wholly-owned unit of Vodafone Group Plc.
Idea rose as much as 29 per cent, the most since the shares began trading in 2007, taking the company’s market valuation above USD 5 billion. Vodafone gained as much as 4.1 per cent.
In a separate BSE filing, Idea Cellular said it plans to raise Rs 500 crore through non-convertible debentures on private placement basis.
Idea share price:
Telecom services provider Idea Cellular Ltd rises as much as 14.3 per cent to highest since April 29, 2016
Shares give up most gains and were up 3.4 per cent.
Idea board approves scheme of amalgamation of Vodafone India and its unit Vodafone Mobile Services Ltd with company
Around 40 million shares change hands in early trade, about 1.6 times the 30-day average volume
Up to Friday’s close, stock had risen about 45.8 per cent this year
(With agency inputs)