Idea, Vodafone complete merger
31 August 2018
Idea Cellular and Vodafone India have completed their merger creating India’s largest telecom service provider (See: Idea-Vodafone merger gets NCLT approval), piping Bharti Airtel, with over 408 million subscribers.
The merged company – being renamed as Vodafone Idea - will also have a broadband network of 340,000 sites and a distribution reach of 1.7 million retail outlets.
The merger is expected to generate Rs14,000 crore in annual synergies, including opex synergies of Rs8,400 crore, equivalent to a net present value of about Rs70,000 crore.
The equity infusion of Rs6,750 crore in Idea and Rs8,600 crore in Vodafone, coupled with monetisation of standalone towers of both companies for an enterprise value of Rs7,850 crore, provides the company a cash balance of over Rs19,300 crore post payout of Rs3,900 crore to the DoT.
“Today, we have created India’s leading telecom operator. It is truly a historic moment. And this is much more than just about creating a large business. It is about our Vision of empowering and enabling a New India and meeting the aspirations of the youth of our country,” said Kumar Mangalam Birla, chairman Aditya Birla Group and Vodafone Idea.
“The ‘Digital India’, as our Prime Minister describes it, is a monumental nation-building opportunity. As Vodafone Idea, we are partnering in this initiative by building a formidable company of international repute, scale and standards,” Birla added.
Additionally, the company has an option to monetise an 11.15-per cent stake in Indus Tower, which would equate to a cash consideration of Rs5,100 crore.
The merged company, which will continue operating both Idea and Vodafone brands, will have a pan India Revenue Market Share (AGR) of 32.2 per cent. On AGR basis it will be a leader across 9 circles.
The company’s new board comprises 12 directors (including 6 independent directors) with Birla as the chairman.
The new company will have the largest voice network with over 2 lakh unique GSM sites to cover over 1.2 billion Indians (92 per cent population coverage).
It will also have a spectrum portfolio of 1850 MHz and a number of broadband carriers, to provide 2G, 3G and 4G services.