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Vodafone, Idea Cellular to create new Indian market leader

Reuters  |  MUMBAI 

By Devidutta Tripathy and Rafael Nam

(Reuters) - Britain's Group and Cellular agreed on Monday to merge their Indian operations to create the country's biggest telecoms business in bid to contest brutal price war sparked by new rival

The combined Vodafone-group would have almost 400 million customers, or 35 percent market share, with an implied enterprise value of 828 billion rupees ($12.66 billion) for and 722 billion rupees for

"The combined entity will become the leading challenger with the scale to compete more effectively," said in the statement.

India's mobile industry was thrown into turmoil with the launch last year of Jio Infocomm, the new 4G mobile broadband network built at cost of more than $20 billion by India's richest businessman, Mukesh Ambani, as part of his Industries conglomerate.

Jio has made an impact with free voice calls and cut-price data services, forcing India's three biggest operators - Bharti Airtel, and - to slash prices and accept lower profits.

"Consolidation is much anticipated and very welcome development in this beleaguered telecom sector," said Arpita Pal Agrawal, partner and telecom analyst at PwC India.

"It will help bring in operational efficiencies and improved quality of service to customers."

has endured tumultuous ride since it entered India in 2007, with fierce competition and high-profile tax battle making business contributing more than 10 percent of its revenues and profits its most unpredictable by far.

Shares in rose as much as 14.25 percent immediately after the but reversed course to fall as much as 14.6 percent, as traders expressed concerns about how the merged entity would value Idea's stake.

CONSOLIDATION

Vodafone, the world's second-largest cellphone operator, will own 45.1 percent of the merged entity, after it transfers about 4.9 percent to promoters of and/or their affiliates for 38.74 billion rupees ($592.15 million) in cash, said.

Aditya Birla Group, the majority owner of Idea, will own 26 percent while other shareholders will own the remaining 28.9 percent. Aditya and eventually aim to own an equal share of the joint venture.

The joint venture will have combined enterprise value of $23.2 billion.

and Idea, which first announced they were in talks in January, expected cost and capex synergies of about $10 billion in net present value after integration costs and spectrum payments, said on Monday.

would have the sole right to appoint the chairman, while would appoint the chief financial officer.

The appointment of chief executive officer and chief operating officer would require the approval of both companies, which would get the right to nominate three board members each.

The deal does not include Vodafone's 42 percent stake in Indus Towers, joint venture between the British group, unit of Bharti Airtel and Cellular.

But both and said they would use their respective stakes in Indus Tower as well as standalone tower assets to reduce debt. owns 11.15 percent of the joint venture, while owns 42 percent.

($1 = 65.4050 Indian rupees)

(Additional reporting by Sankalp Phartiyal and Swati Bhat in and Samantha Kareen Nair in BENGALURU; Editing by Stephen Coates)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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Vodafone, Idea Cellular to create new Indian market leader

MUMBAI (Reuters) - Britain's Vodafone Group and Idea Cellular agreed on Monday to merge their Indian operations to create the country's biggest telecoms business in a bid to contest a brutal price war sparked by new rival Reliance.

By Devidutta Tripathy and Rafael Nam

(Reuters) - Britain's Group and Cellular agreed on Monday to merge their Indian operations to create the country's biggest telecoms business in bid to contest brutal price war sparked by new rival

The combined Vodafone-group would have almost 400 million customers, or 35 percent market share, with an implied enterprise value of 828 billion rupees ($12.66 billion) for and 722 billion rupees for

"The combined entity will become the leading challenger with the scale to compete more effectively," said in the statement.

India's mobile industry was thrown into turmoil with the launch last year of Jio Infocomm, the new 4G mobile broadband network built at cost of more than $20 billion by India's richest businessman, Mukesh Ambani, as part of his Industries conglomerate.

Jio has made an impact with free voice calls and cut-price data services, forcing India's three biggest operators - Bharti Airtel, and - to slash prices and accept lower profits.

"Consolidation is much anticipated and very welcome development in this beleaguered telecom sector," said Arpita Pal Agrawal, partner and telecom analyst at PwC India.

"It will help bring in operational efficiencies and improved quality of service to customers."

has endured tumultuous ride since it entered India in 2007, with fierce competition and high-profile tax battle making business contributing more than 10 percent of its revenues and profits its most unpredictable by far.

Shares in rose as much as 14.25 percent immediately after the but reversed course to fall as much as 14.6 percent, as traders expressed concerns about how the merged entity would value Idea's stake.

CONSOLIDATION

Vodafone, the world's second-largest cellphone operator, will own 45.1 percent of the merged entity, after it transfers about 4.9 percent to promoters of and/or their affiliates for 38.74 billion rupees ($592.15 million) in cash, said.

Aditya Birla Group, the majority owner of Idea, will own 26 percent while other shareholders will own the remaining 28.9 percent. Aditya and eventually aim to own an equal share of the joint venture.

The joint venture will have combined enterprise value of $23.2 billion.

and Idea, which first announced they were in talks in January, expected cost and capex synergies of about $10 billion in net present value after integration costs and spectrum payments, said on Monday.

would have the sole right to appoint the chairman, while would appoint the chief financial officer.

The appointment of chief executive officer and chief operating officer would require the approval of both companies, which would get the right to nominate three board members each.

The deal does not include Vodafone's 42 percent stake in Indus Towers, joint venture between the British group, unit of Bharti Airtel and Cellular.

But both and said they would use their respective stakes in Indus Tower as well as standalone tower assets to reduce debt. owns 11.15 percent of the joint venture, while owns 42 percent.

($1 = 65.4050 Indian rupees)

(Additional reporting by Sankalp Phartiyal and Swati Bhat in and Samantha Kareen Nair in BENGALURU; Editing by Stephen Coates)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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Business Standard
177 22

Vodafone, Idea Cellular to create new Indian market leader

By Devidutta Tripathy and Rafael Nam

(Reuters) - Britain's Group and Cellular agreed on Monday to merge their Indian operations to create the country's biggest telecoms business in bid to contest brutal price war sparked by new rival

The combined Vodafone-group would have almost 400 million customers, or 35 percent market share, with an implied enterprise value of 828 billion rupees ($12.66 billion) for and 722 billion rupees for

"The combined entity will become the leading challenger with the scale to compete more effectively," said in the statement.

India's mobile industry was thrown into turmoil with the launch last year of Jio Infocomm, the new 4G mobile broadband network built at cost of more than $20 billion by India's richest businessman, Mukesh Ambani, as part of his Industries conglomerate.

Jio has made an impact with free voice calls and cut-price data services, forcing India's three biggest operators - Bharti Airtel, and - to slash prices and accept lower profits.

"Consolidation is much anticipated and very welcome development in this beleaguered telecom sector," said Arpita Pal Agrawal, partner and telecom analyst at PwC India.

"It will help bring in operational efficiencies and improved quality of service to customers."

has endured tumultuous ride since it entered India in 2007, with fierce competition and high-profile tax battle making business contributing more than 10 percent of its revenues and profits its most unpredictable by far.

Shares in rose as much as 14.25 percent immediately after the but reversed course to fall as much as 14.6 percent, as traders expressed concerns about how the merged entity would value Idea's stake.

CONSOLIDATION

Vodafone, the world's second-largest cellphone operator, will own 45.1 percent of the merged entity, after it transfers about 4.9 percent to promoters of and/or their affiliates for 38.74 billion rupees ($592.15 million) in cash, said.

Aditya Birla Group, the majority owner of Idea, will own 26 percent while other shareholders will own the remaining 28.9 percent. Aditya and eventually aim to own an equal share of the joint venture.

The joint venture will have combined enterprise value of $23.2 billion.

and Idea, which first announced they were in talks in January, expected cost and capex synergies of about $10 billion in net present value after integration costs and spectrum payments, said on Monday.

would have the sole right to appoint the chairman, while would appoint the chief financial officer.

The appointment of chief executive officer and chief operating officer would require the approval of both companies, which would get the right to nominate three board members each.

The deal does not include Vodafone's 42 percent stake in Indus Towers, joint venture between the British group, unit of Bharti Airtel and Cellular.

But both and said they would use their respective stakes in Indus Tower as well as standalone tower assets to reduce debt. owns 11.15 percent of the joint venture, while owns 42 percent.

($1 = 65.4050 Indian rupees)

(Additional reporting by Sankalp Phartiyal and Swati Bhat in and Samantha Kareen Nair in BENGALURU; Editing by Stephen Coates)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22