Bookmark Kaumudi Online  Bookmark this site  Editor@Kaumudi  |  Marketing  Print Advt rates  |  Calendar 2012        Go!    
 
 
August 20, Sunday 2017 3:11 PM       

       HEADLINES: Gadgil slams Athirappilly project                                              Three run over by train in Alappuzha                                              Hashish oil of 20 crore seized in Idukki                                              Chennithala seeks Minister Shylaja’s resignation                                              Yogi takes dig at Rahul, says Gorakhpur isn’t 'picnic spot'                                              Nitish Kumar-led JD(U) passes resolution to join NDA                                              Final decision by Monday: OPS on AIADMK merger                                              Muzaffarnagar train derailment: 11 killed, over 30 injured                                              Rahul Gandhi meets Gorakhpur tragedy victims' kin, assures help                                              14 dead in twin attacks as Spanish police launch manhunt                                              Afghanistan celebrates 98 years of Independence                                              Charlottesville violence: Donald Trump's arts council quits                                              Spain: 'Level 4' threat alert post Barcelona terror attack                                              Indonesia begins countdown to 2018 Asian Games                                              Some felt Kumble was strict but not me, says Wriddhiman Saha                                              HCA not following Lodha panel recommendations: Azharuddin                                              Nadal returns to No. 1 with heavy heart over Barcelona                                              Mirza, Bopanna crash out of Cincinnati                                              Kaumudi Facebook
       BUSINESS Next Article: Softbank appoints Kabir Mishra to Snapdeal board  
       Vodafone, Idea Cellular to create new Indian market leader
 
         Posted on :22:22:33 Mar 20, 2017
   
A A
       Last edited on:22:22:33 Mar 20, 2017
         Tags: Vodafone, Idea Cellular, Indian market leader
 
MUMBAI: British telecom major Vodafone and Aditya Birla group-run Idea Cellular today announced the merger of their operations, creating the largest mobile operator by customer and revenue market share.
 
The merged entity, which will come into force over the next two years, will be headed by Kumar Mangalam Birla as Chairman. Vodafone will have its nominee as the chief financial officer, its CEO Vittorio Colao said here at a press meet, which was also attended by Birla.
 
The all-share merger for both partners excludes Vodafone's 42 per cent stake in Indus Towers and will be effected through issuing new shares in Idea to Vodafone and result in Vodafone deconsolidating Vodafone India.
 
Vodafone will own 45.1 per cent in the new company after transferring 4.9 per cent to the Aditya Birla group for Rs 3,874 crore in cash concurrent with completion of the merger. Idea will hold 26 per cent of the combined entity while the rest will be owned by public shareholders.
 
Idea and Vodafone said the merged entity will be jointly controlled by Vodafone and the Aditya Birla group as per shareholders' agreement. With 204.68 million customers, Vodafone enjoys market share of 18.16 per cent. Idea has 16.9 per cent with 190.51 million customers as of December 2016, according to Trai data.
 
Airtel, with a market share of 23.58 per cent and a customer base of 265.85 million, leads the market both in terms of revenue and customer base. According to CLSA report in January, the merged entity will have revenue of over Rs 80,000 crore, translating into a 43 per cent share by revenue and 40 per cent by active subscriber base with around 400 million customers.
 
The combined venture will account for over 25 per cent of the allocated spectrum and will have to sell about 1 per cent (worth Rs 5,400 crore) to comply with spectrum cap norms.
 
"The merger pegs implied enterprise valuation of Rs 82,800 crore (USD 12.4 billion) for Vodafone India and Rs 72,200 crore (USD 10.8 billion) for Idea," according to an exchange filing by Idea.
 
The companies had a net debt of Rs 1.07 trillion as of December 2016. The Vodafone chief, who ruled out any chance of the lingering tax dispute with the government to affect the merger process, also said both the companies will have three representatives each on the board of the new company.
 
Colao also said the merger makes possible synergies of USD 10 billion. He also added that both the brands, considering their strengths, will continue to operate separately.
 
Indicating Vodafone's intention of gradually exiting the country, Colao and Birla said over a period, both companies will have equal stakes in the merged entity. Birla said the fund for picking up 4.9 per cent of Vodafone stake for Rs 3,874 crore will come from the promoters, and not from Idea.
 
He also ruled out any major downsizing at Idea post merger. The scheme of amalgamation includes Vodafone India (VIL) and its wholly-owned subsidiary Vodafone Mobile Services (VMSL) merging with the new company.
 
Vodafone will keep its 42 per cent consideration in Indus Towers out of the merger process. The turnover of Vodafone India is Rs 5,025 crore and that of Vodafone Mobile Service is 40,378 crore. Idea's turnover is Rs 36,000 crore.
 
The net worth of VIL is 12,855 crore, VMSL's Rs 3,737 crore and Idea Rs 24,296 crore.
The Birlas will have the right to acquire more shares from Vodafone under an agreed mechanism with a view to equalising the shareholdings over time, said a joint statement by the two companies.
 
The merger will result in substantial cost and capex synergies with an estimated net present value of around USD 10 billion after integration costs and spectrum liberalisation payments, with estimated savings of USD 2.1 billion annually from the fourth year of the merger.
 
Vodafone India will be deconsolidated by Vodafone and reported as a joint venture post-closing, reducing Vodafone Group's net debt by around USD 8.2 billion.
 
Colao said that to help the Birla group increase the shareholding in the combined company after four years, Vodafone will sell shares over the following five-year period.
 
Until equalisation is achieved, the voting rights of the additional shares held by Vodafone will be restricted and votes will be exercised jointly under the terms of the shareholders' agreement. The AB group will have the right to buy 9.5 per cent in the entity at Rs 130 per share.
 
Given the present spectrum holding, revenue and subscriber base, both the companies need to work on synergy to comply with rules.
 
As per the merger and acquisition rules, an entity should not hold over 25 per cent spectrum allocated in a telecom circle and 50 per cent of spectrum allocated in a particular band in a service area.
 
The merged entity should also not have more than 50 per cent revenue and subscriber market share. European brokerage CLSA recently said the merged entity will breach revenue market share, subscriber and spectrum caps in five markets.
 
The combined entity is expected to cross the spectrum cap in 900 Mhz band in Maharashtra, Gujarat, Kerala, Haryana and UP West and in 2,500 Mhz band in Maharashtra and Gujarat. 
A A
       BUSINESS
Next Article: Softbank appoints Kabir Mishra to Snapdeal board
 
 
BUSINESS HEADLINES
US law firms initiate investigation against Infosys  
Infosys board approves up to Rs. 13,000 cr buyback offer  
RBI to issue new fluorescent blue Rs 50 notes  
PM to launch Rs 15k-cr road projects in Rajasthan  
Sikka quits Infosys after Murthy campaign  
Nifty snaps 3-day winning spree, down 67 pts  
Maruti rolls out sporty 'Ciaz S' at Rs 9.39 lakh  
RBI still has room to slash rate in current fiscal: Kidwai  
Our full sympathy with agitating Noida home buyers: FM  
Videocon names Rajesh Rathi as business head  
Sensex surges 235 pts as geo-political tensions ease  
Sensex jumps 191 points, ignores weak IIP data  
Trai website to soon display telcos' tariff plans: Sharma  
NPA resolution to spur credit expansion, growth: Panagariya  
Sensex, Nifty snap 5-week winning streak on profit-booking  
200 Indian business reps see great investment opportunities in Kazakhstan  
FICCI for substantial slash in policy rates by RBI  
Kochi Shipyard makes strong market debut after $225 million IPO  
Gold tops Rs 30,000-mark, spurred by safe haven appeal  
Govt has not written off single rupee of corporate loans: FM  
Sensex losses mount on global sell-off, dives 336 pts  
Def Min wants non-lapsable capital fund; writes to finance min  
Parijat Industries builds war chest of international trademarks in 45 countries  
Sensex closes at 1-mth low, hit by losses for 4th day  
Rupee wobbles on global tensions, dives 21 paise to 63.84  
 
Do you think conspiracy is going on to trap Senkumar in cases?
yes
 
no
 
don't know
 
 
 
Home Kerala India World Business Sports Sci&Tech Education Automobile CityNews Movies Environment Letters 
© Copyright keralakaumudi Online 2011  |  Reproduction in whole or in part without written permission is prohibited.
Head Office Address: Kaumudi Buildings, Pettah P.O, Trivandrum - 695024, India.
Online queries talk to Deepu Sasidharan, + 91 98472 38959 or Email deepu[at]kaumudi.com
Customer Service -Advertisement Disclaimer Statement   |  Copyright Policy