Vodafone, Idea announces merger and plans to roll out 5G in India
21st March 2017Category : TechnologiesPublished by :Rahul Verma Reading Time : 5 Minute News Sourced : India
Vodafone Idea Merger
In effort to wither away the ongoing war in wirelesss telecoms, Vodafone and Idea Cellular has announced merge, excluding Vodafone’s 42% stake in Indus Towers Ltd, to create India’s largest telecom company with a total revenue of over Rs 80,000 crore.
Vodafone will be a dominant partner in the merger with 45.1% stake after it will transfer a stake of 4.9% to the Aditya Birla group for Rs3,874 crore to complete the merger.
“The promoters of Idea have the right to acquire up to a 9.5% additional stake in from Vodafone... if Vodafone and the promoters of Idea do not have equal shareholding by the expiry of the fourth year from the completion of amalgamation, Vodafone is obliged to reduce its holding in order to equalise its ownership with that of the promoters of Idea over the following five years,” Idea Cellular said in a statement.
Both Vodafone and Idea Cellular have the sole right to appoint the chairman, meanwhile, Kumar Mangalam Birla, Aditya Birla group chairman to be the chairman of the merged entity.
The appointments of chief executive and chief operating officers will require approval of the boards of both the companies while Vodafone will have exclusive rights to appoint chief financial officer.
Kumar Mangalam Birla, said, “This landmark combination will enable the Aditya Birla group to create a high quality digital infrastructure that will transition the Indian population towards a digital lifestyle and make the government’s Digital India vision a reality. For Idea shareholders and lenders who have supported us thus far, this transaction is highly accretive, and Idea and Vodafone will together create a very valuable company given our complementary strengths.”
Vodafone Group Plc chief executive officer, Vittorio Colao, said, “The combined company will have the scale required to ensure sustainable consumer choice in a competitive market and to expand new technologies—such as mobile money services—that have the potential to transform daily life for every Indian. We look forward to working with the Aditya Birla Group to create value for all stakeholders.”
The new entity which will emerge out of Idea-Vodafone will be able to roll out 5G in India much sooner, according to Vodafone PLC CEO Vittorio Colao.
The combined company would become the leading communications provider in India with almost 400 million customers, 35% customer market share and 41% revenue market share. The brand strategy of the combined company will be developed in due course and will leverage customers’ affinity for both existing brands, built up over the past decade. The name of the combined listed company will be changed in due course, Idea said in a statement.
More mileage in price turf
Relince Jio, with the free-for-year service created storm for telecom players, this merger will give mileage to both the company in price cut situation and further to consolidation. Tata, Aircel are in talks for merger whereas exit of Telenor indicate the tug of war situation in Telecom sector.
Value to services
Here, for companies like Voda-Idea, mergers are becoming need of hour for sustainabililty, tie ups may bring cellular services at low price with robust network throughut the country. The merger will boost infrastructure with high quality of services like 4G and further to yet to introduce lightening fast 5G network.
Vodafone and Idea anticipate that completion will take place during the 2018 calendar year.
The key highlights mentioned on Idea website: http://www.ideacellular.com/media-centre