British telecom major Vodafone has brought in Martin Pieters, former Managing Director and CEO of its Indian arm, to work on proposed merger of Vodafone India with Idea Cellular, sources said. Vodafone Group Chief Executive Vittorio Colao is also likely to brief all business heads of the Indian arm over a conference call next week about the proposed merger. “Martin Pieters has reached India to oversee proposed merger of Vodafone India with Idea Cellular. Vittorio (Colao) will brief all business heads of Vodafone India over a conference call on the merger on February 24,” said a source. Vodafone declined to comment. Pieters, the longest serving Chief Executive Officer of a telecom firm in the India, who stepped down on April 1, 2015 to be succeeded by present Vodafone India MD and CEO Sunil Sood. If the deal is successful, the combined entity will create largest telecom player in the country with revenue share of around 40 per cent and over 380 million subscribers base, as per India Ratings and Research.
However, given the present spectrum holding, revenue and subscriber base, both the companies need to work on synergy to comply with rules. According to the merger and acquisition rules, an entity should not hold more than 25 per cent spectrum allocated in a telecom circle and 50 per cent on spectrum allocated in a particular band in a service area.
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The merger entity should also not have more than 50 per cent revenue and subscriber market share. As per CLSA report, the merged entity would breach revenue market share, subscriber and spectrum caps in five markets. The combined entity as per present scenario will breach spectrum cap in 900 Mhz band in Maharashtra, Gujarat, Kerala, Haryana and UP West and in 2500 Mhz band in Maharashtra and Gujarat, it said.
CLSA estimated that the excess spectrum which would need to be surrendered or sold off is valued around Rs 5,400 crore and for the merger both the companies will also have to shell out Rs 5,700 crore for liberalising radiowaves that they were allocated administratively. According to sources, the companies are likely to request government to relax merger and acquisition rules.