New Delhi :The Central government approved the merger of Vodafone and Idea Cellular, creating the country’s largest mobile operator with 35 per cent market share.
The merged entity, which would have over 430 million subscribers, came after Idea Cellular and Vodafone India made a joint payment of Rs 7,268.78 crore to the Department of Telecom (DoT) for merging their respective telecom businesses. The payment was, however, made ‘under protest’. Bharti Airtel is currently the market leader with 344 million customers.
The two telecom operators would now approach Registrar of Companies (RoC) for stipulated filings of approvals, completing the last leg of formalities.
The DoT had given an initial clearance to the merger on July 9 with conditions that the merged entity will have to abide by the decisions of the telecom tribunal and other courts. These would stay even after the final clearance.
At the time of giving the initial clearance, the DoT asked the two operators to clear the dues that were pending towards them to get the final clearance.
Following this, Idea Cellular and Vodafone India, earlier this week, made a joint payment of Rs 7,268.78 crore ‘under protest’ to the government. This included Rs 3,926.34 crore paid in cash and Rs 3,342.44 crore furnished as bank guarantees.
Kumar Mangalam Birla will be the non-executive Chairman and Balesh Sharma the new CEO of the merged entity, which will remain listed. Vodafone will have a 45.1 per cent stake in the combined entity, while Aditya Birla Group will have 26 per cent and Idea shareholders 28.9 per cent.
The Aditya Birla Group has the right to acquire up to a 9.5 per cent additional stake from Vodafone under an agreed mechanism with a view to equalising the shareholdings overtime.
Incidentally, the merger will help the two operators to jointly take on the might of Mukesh Ambani-controlled Reliance Jio in the fiercely competitive domestic telecom market where there are now just three telecom operators.
The deal gave Vodafone India an implied enterprise value of around Rs 82,800 crore and Idea an enterprise value of Rs 72,200 crore. Vodafone Group CEO Vittorio Colao had said that the company expects the merger to close in August.