Idea approves merger with Vodafone India

Idea Cellular on Monday announced that the board has approved its merger of Vodafone India Limited (VIL) and its wholly-owned subsidiary Vodafone Mobile Services Limited (VMSL) with itself, thus paving way for the creation of India's largest telecom entity.

As per minutes of the meeting held earlier today, Vodafone will hold 45 percent in the combined entity. Idea promoters will hold 26 percent in the combined entity.

Vodafone will own 45.1 percent of the company after transferring a stake to the Promoters of Idea for Rs. 38.74 billion in cash, post completion of the amalgamation.

The merger will facilitate VIL and VMSL's entire business to be vest in the company, excluding VIL's 42 percent share in Indus Towers. The merger will come into effect after new shares are issued in Idea to Vodafone and would result in Vodafone deconsolidating Vodafone India.

The merger is said to increase competition in the telecom space where players are in a tussle to increase revenue and subscriptions.

The two parties believe that the merger will enhance pan India 3G/4G footprint, thereby accelerating the Narendra Modi-Government's 'Digital India' initiative. Furthermore, it is believed to help in leveraging customer affinity towards the two brands in the telecom spectrum.