Idea, Voda merger to impact 400 million users

Kumar Mangalam Birla, Chairman of the Aditya Birla Group, will be its Chairman. “Vodafone Group and Idea Cellular announced they have reached an agreement to combine their operations in India (excluding Vodafone’s 42 per cent stake in Indus Towers) to create India’s largest telecom operator,” a joint statement by the companies said. 

“The combined firm would become the leading communications provider in India with almost 400 mn customers, 35 per cent customer market share and 41 pc revenue market share,” it added. Idea Cellular in a regulatory filing said its Board of Directors “has approved the scheme of amalgamation of Vodafone India and its wholly owned subsidiary Vodafone Mobile Service Ltd with the company (Idea)”. The merger will create an entity with over Rs 80,000 cr revenue. 

“Vodafone will own 45.1 per cent of the combined company after transferring a stake of 4.9 per cent to the promoters of Idea and/ or their affiliates for Rs 3,874 crore in cash concurrent with the completion of the amalgamation,” the statement said. “The promoters of Idea will hold 26 per cent of the company and the balance will be held by the public.”

The merged entity will have around 406 million subscriber base, replacing the current dominant player Bharti Airtel (around 269 million customers). “This landmark combination will enable the Aditya Birla Group to create a high quality digital infrastructure that will tran sition the Indian population towards a digital lifestyle and make the government’s Digital India vision a reality,” said Kumar Mangalam Birla. 

Meanwhile, Idea Cellular said Reliance Jio’s announcement to make subscribers pay for services from April has helped the “recovery” of the industry. “There is some degree of recovery which has started to happen in the industry with the announcement of charging and with some monetisation process that has started by the new entrant,” Idea MD Himanshu Kapania said. 

Jio netted over 100 mn subscribers in less than six months of launch. “Now, there is an announcement by the new entrant that they are going to charge from April 1, we are also looking forward to the charge,” Kapania said. “We are hopeful that market repairs will start and we believe that from March itself the repairs has started to kick in,” he added. Kapania conceded that launch of Jio’s services last September hurt the numbers for the third and the fourth quarters. He expressed hope that the industry will return to double digit growth in the next 12-18 months.