Home Business Telecom Vodafone India and Idea Offically Announce Merger, Set to Become India’s Largest TelCo

Vodafone India and Idea Offically Announce Merger, Set to Become India’s Largest TelCo

Idea Cellular and Vodafone India, the Indian arm of the British telecom giant, today officially announced their merger. The strategic move is being seen as a counter to Reliance Jio’s aggressive expansion in the domestic market. The Mukesh Ambani-led telecom giant is the fastest telco to reach a 100 million subscribers. Bharti Airtel is currently the largest telecom operator in the country and the Vodafone/Idea combine may tip the scales in size. Vodafone is currently the second largest telecom operator in the country while Idea Cellular is the third largest.

vodafone and idea
A merger between Vodafone and Idea would create India’s largest TelCo

Once the merger is completed, the Vodafone India and Idea Cellular combine will be the largest telecom operator in the country. It will also have the largest 3G and 4G footprint in the country. After the advent of Reliance Jio, consolidation is the name of the game in the India telecom segment, which is moving from a voice-based industry to a data-based one. A meeting was held today by the board of directors of Idea Cellular, where the “scheme of amalgamation of Vodafone India Limited (VIL) and its wholly owned subsidiary Vodafone Mobile Services Limited (VMSL) with the company” was brought up. In a regulatory filing, SOP for deals like these, Vodafone India is said to have an annual revenue exceeding Rs. 46,000 crores while Idea Cellular boasts of revenues of over Rs. 36,000 crores.

Once the merged entity officially exists, Vodafone India will own 45.1 percent of the unnamed entity. This is after Vodafone transfers about 4.9 percent to Idea Cellular‘s promoters for Rs 3,874 in an all-cash deal.The deal does not include Vodafone’s 42 percent stake in Indus Towers, the telecom tower giant. Idea Cellular’s parent company, the Aditya Birla Group, will own 26 percent of the entity with a clause of acquiring more shares from Vodafone over time in order to level the shares.

The combined entity is expected to provide steep competition to Reliance Jio, which has started a brutal price war. For the quarter ended December, Bharti Airtel had posted its lowest profit in four years. The data wars, seemingly, has just begun.

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