Idea and Vodafone to Merge into a Large Telecom Entity

Recently Idea Cellular, a Kumar Mangalam owned Birla company announced its approval for merger with Vodafone India and its subsidiary Vodafone India mobile services. The newly formed entity is expected to be the largest telecom operator of the country.

Market Share and Subscription of the New Entity

The company formed as a result of the merger is estimated to have around 400 million subscribers, 35% market share and 41% revenue market share. After transferring 4.9% to the promoters of Idea Cellular, Vodafone will own 45.1% stake in the combined entity, said a statement. It further mentioned that Kumar Mangalam Birla and other promoters of Idea Group will hold 26% and the rest will be owned by public.

Official comments on the Merger

Kumar Mangalam Birla, the Chairman of Aditya Birla Group mentioned that this combination will help Aditya Birla Group to create a high quality digital infrastructure. “This infrastructure will transition the Indian population towards a digital lifestyle and make the Government’s Digital India vision a reality” added Birla.

The Chief Executive of Vodafone Group, Vittorio Colao stated that the company looks forward to working with the Aditya Birla Group to create value for all stakeholders. “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” explained Colao.

Subject to approvals from SEBI, the telecom department and Competition Commission of India, creditors and stock exchanges, the merger should be completed within 24 months, i.e. in 2018. This alliance is also expected to push Bharti Airtel to the second position of telecom operators in India.

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