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March 20, 2017

Vodafone, Idea Cellular announce merger to create India’s largest telco

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The board of India's third largest operator, Aditya Birla group firm Idea Cellular has today announced the merger of Vodafone India and its subsidiary Vodafone Mobile Services with itself, in the process creating the country's largest telecom entity. The merger will be effected through the issue of new shares in Idea to Vodafone. Kumarmangalam Birla will be the Chairman of merged Vodafone-Idea entity and both the companies will have equal stakes in the merged entity over a period of time.

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 promoters 26 percent, and the rest by the public. The combined entity will have roughly Rs 80,000 crore of annual revenues and 400 million customers. This works out to a 41 percent market share by revenues, and 35 percent market share by subscribers.

The deal has been arrived at with an implied enterprise valuation of Vodafone India Rs 82,800 crore and that of Idea Cellular at Rs 72,200 crore.

This merger will create India’s biggest telecom services provider with a customer base of over 394 million.

Impacts of this Merger :
  • The merger would create a company with nearly 40 crore users. 
  • The merger between India's second largest operator, Vodafone and its third largest operator, Idea could command a market share of 43%, thereby taking over current leader Bharti Airtel. 
  • Further, the merger would create India's largest telecom company.
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