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Shares of Idea Cellular today tumbled nearly 10 per cent, wiping out Rs 3,692 crore from the company's market valuation, after the announcement of the merger of the Aditya Birla Group-run firm with Vodafone India.
Idea's stock plunged 9.55 per cent to end at Rs 97.60 on the BSE. During the day, it plummeted 14.73 per cent to Rs 92.
On the NSE, it dived 9.62 per cent to close at Rs 97.70.
Following the decline in the stock, the company's market valuation fell by Rs 3,691.87 crore to Rs 35,170.13 crore.
"Telecom sector has undergone changes over the years. While on one hand, the sector witnessed consolidation in terms of players, on the other hand, competitive intensity has been equally high. In the current scenario, while the merger of Vodafone-Idea makes them dominant player, the competition could still be high in the data business within the industry," Abhishek Anand, Fund Manager - Centrum Broking Ltd, said.
The merged entity, which will come into force over the next two years, will be headed by Kumar Mangalam Birla as Chairman.
The all-share merger for both partners excludes Vodafone's 42 per cent stake in Indus Towers and will be effected through issuing new shares in Idea to Vodafone and result in Vodafone deconsolidating Vodafone India.
Vodafone will own 45.1 per cent in the new company after transferring 4.9 per cent to the Aditya Birla group for Rs 3,874 crore in cash concurrent with completion of the merger.
Idea will hold 26 per cent of the combined entity while the rest will be owned by public shareholders.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)