Vodafone Group Plc’s Chief Executive Officer Vittorio Colao has told the senior executives at its India unit that the company to be formed after the proposed merger with Idea Cellular will be a truly co-managed entity with both the partners having an equal say in its business matters, ET Now reported citing unidentified sources.
Colao also said that a CEO of the merged entity will be named few months before the completion of the merger by the combined board, which will be equally represented by Vodafone Group and Idea Cellular’s parent Aditya Birla Group, ET Now reported.
The proposed merger may take 12-15 months to conclude, Colao reportedly said, as the companies will have to seek various regulatory permissions from the Competition Commission of India, the Department of Telecom and courts.
Earlier this month, India’s second-largest telecommunication services provider Vodafone confirmed it is in talks for an all-share merger with the third-largest operator Idea Cellular, in the first consolidation move in the Indian telecom industry reeling under the pressure of intense competition from Reliance Jio’s free service offers. The proposed merger could give both the companies the required scale to take on the heightened competition.
The proposed merger could be modeled on Vodafone Group’s equal joint ventures with Hutchison in Australia and with Liberty Global in the Netherlands, ET Now report said.
Vodafone is reported to have already appointed professional services firms Deloitte and EY to carry out due diligence for the proposed merger. Both the companies have set up the teams for due diligence and expect to complete it soon.
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The due diligence teams would identify potential areas of value erosion from the merger and would also look for any tax liabilities arising out of combining the two firms. The announcement of the merger is expected later this week, according to various news reports.
A possible Vodafone-Idea combine, with a total subscriber base of 39 crore, will surpass Bharti Airtel as the largest telecommunication company, and will be far ahead of Reliance Jio’s 10 crore. Further, the combined entity would have 43% of the revenue market share and 40% of the active subscriber base, research firm CLSA said. The two operators complement each other, with Vodafone having strong presence in urban areas and Idea being an established player in the hinterland. The new capital that Vodafone brings in may be used to pare the substantial debt that Idea has on its books.
Notably, Bharti Airtel announced on Thursday that it will acquire the smaller rival Telenor India to capture its operations in seven circles (service areas) with high population concentration.