[Update] – Kumar Mangalam Birla will be chairman of the merged company, and Vodafone will appoint a CFO.
Couple of months after Vodafone confirming merger talks with Aditya Birla Group’s telecom arm Idea Cellular, Board of Directors of Idea Cellular at its meeting held today, 20th March have approved amalgamation of Vodafone India Limited (VIL) and its wholly owned subsidiary Vodafone Mobile Services Limited (VMSL) with Idea. The combined market share of both the telecom operators add up to 43%, making it the largest telecom firm, surpassing Airtel.
The combined company will have sufficient spectrum to compete effectively with the other major operators in the market. It would
hold 1,850 MHz, including circa 1,645 MHz of liberalised spectrum acquired through auctions.
Upon the amalgamation becoming effective, the entire business of VIL and VMSL (excluding VIL’s investment in Indus Towers Limited, its international network assets and information technology platforms) will vest in Idea.
The shareholders of Vodafone India will own 45.1% of Idea after transferring a stake of -4.9% to some or all of the existing promoters of Idea and / or their affiliates (together, Promoters of Idea) for INR 38.74 billion in cash concurrent with the completion of the amalgamation.
The Promoters of Idea will hold 26% of Idea and the balance 28.9% will be held by the public. In connection with the Proposed Merger, the Board of the Company has approved the execution of an Implementation Agreement amongst Idea and the Promoters of Idea, VIL, VMSL, Vodafone and Vodafone International Holdings BV.
In addition to the Implementation Agreement, the Board of the Company has approved the execution of a Shareholders’ Agreement amongst Idea, Promoters of Idea, Vodafone and Vodafone International Holdings BV which will be effective only upon the amalgamation becoming effective.
The merger is subject to receipt of necessary approvals of shareholders, creditors, SEBI, Stock Exchanges, the Competition Commission of India, the Department of Telecommunications (DoT), the Foreign Investment Promotion Board, the Reserve Bank of India and other governmental authorities. Vodafone and Idea anticipate that completion will take place during the 2018 calendar year.
Aditya Birla Group Chairman, Kumar Mangalam Birla, said:
Throughout its history, the Aditya Birla Group has been synonymous with the task of nation building and driving inclusive growth in the country. This landmark combination will enable the Aditya Birla Group to create a high quality digital infrastructure that will transition the Indian population towards a digital lifestyle and make the Government’s Digital India vision a reality. For Idea shareholders and lenders who have supported us thus far, this transaction is highly accretive, and Idea and Vodafone will together create a very valuable company given our complementary strengths.
Vodafone Group Plc Chief Executive, Vittorio Colao said:
"Vodafone, Idea announce merger to become India's biggest telecom operator",
The combination of Vodafone India and Idea will create a new champion of Digital India founded with a long-term commitment and vision to bring world-class 4G networks to villages, towns and cities across India. 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. We look forward to working with the Aditya Birla Group to create value for all stakeholders.