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Friday, July 27, 2018

DoT Gets Final Approval to Vodafone-Idea Merger to Create a $23 B Telecom Entity


The Department of Telecom on Thursday gave its final approval to the mega merger of Vodafone and Idea Cellular, which will create the country’s largest mobile operator with around 430 million subscribers.

Following Idea Cellular and Vodafone India making a joint payment of Rs 7,268.78 crore for merging their mobile businesses, the DoT gave its final approval for the merger. Now the entities will approach the Registrar of Companies (RoC) for stipulated filings for approval, completing the last leg of formalities.

The DoT gave conditional nod to the merger on July 9, and asked the two firms to meet the demand raised for taking the merger on record.

Once the merger process is complete, the new entity will create India’s largest telecom operator worth over $23 billion (over Rs 1.5 lakh crore), with 35% customer market share. The merger will also help both the firms tide over their debt and face competition in the industry, which has intensified after the entry of Reliance Jio to the market.

The merger entails transfer of licences of Vodafone India and Vodafone Mobile Services Limited to Idea Cellular. The combined entity will begin working as a single entity Vodafone Idea Limited.

Vodafone will own 45.1% stake in the combined entity, while Kumar Mangalam Birla-led Aditya Birla Group would have 26%, and Idea shareholders the remaining 28.9%.

Accordingly, Birla will be the non-executive Chairman and Balesh Sharma (currently Chief Operating Officer of Vodafone India) will be the new CEO of the merged entity, which will remain listed.

Birla said he is “very optimistic” about the two firms coming together. “It is a very exciting journey ahead of us in the sense of Idea and Vodafone coming together.

The actual work starts now so we will see... we are very optimistic about it,” he added.

On how long it will take for the merged entity to be operational, Birla said it would take “a few weeks”. He said the companies are yet to decide on the branding for the new entity. 

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