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Vodafone and Idea complete merger, creating India’s largest mobile provider

31 Aug 2018

Vodafone India and Idea Cellular – India’s second and third-largest mobile providers by subscribers, respectively – have announced the completion of their long-awaited merger, after the deal received its last approval, from the National Company Law Tribunal (NCLT). The combined entity, which will be renamed to Vodafone Idea shortly, overtakes Bharti Airtel as India’s mobile market leader, with a combined total of more than 443 million mobile subscriptions or 38.7% of the market, compared to Airtel’s 344 million (30.1%). The Economic Times quotes the company’s new chairman, Kumar Mangalam Birla as saying of the tie-up: ‘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. As Vodafone Idea, we are partnering in this initiative by building a formidable company of international repute, scale and standards.’

The pair earned revenues of INR585 billion (USD8.2 billion) and EBITDA of INR107 billion in the twelve months to 30 June 2018 and are expected to generate INR140 billion in run-rate cost and CAPEX synergies, a statement from Vodafone noted. The merged entity has a cash balance of INR193 billion and net debt of INR1.09 trillion – including adjustments for the INR39 billion payment of spectrum liberalisation fees and INR86 billion of equity funding provided by Vodafone Group.

The combined company is currently owned 50% by Vodafone Group and 21.2% by Idea Cellular parent Aditya Birla whilst the remaining 28.8% is held by Idea’s other shareholders. Under the terms of the merger agreement, however, Vodafone will sell a 4.8% stake in Vodafone Idea to Aditya Birla for a total consideration of INR26 billion, following which Vodafone will hold a 45.2% stake and Aditya Birla 26.0%. The latter also has the option to purchase additional shares from Vodafone Group over the next three years with a view to equalising the two groups’ shareholdings.

India, Bharti Airtel, Vi (Vodafone Idea Limited, VIL), Vodafone Group, Vodafone India

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