Idea to extend 4G service to 750 cities by June

Idea's 4G footprint will cover 750 cities across 10 telecom circles by June this year, a top company official said today.
Since December last year, Idea has rapidly rolled out its high-speed 4G LTE network to cover seven major markets in the country, the company's Chief Marketing Officer Shashi Shankar told reporters here.
"By March 2016, our services will extend to three more key markets namely, Maharashtra and Goa, North East and Odisha, and by June 2016, Idea's 4G footprint will cover 750 cities across 10 telecom circles," he said.
Idea Cellular currently holds 1800 MHz 4G spectrum in these 10 circles which account for 50 per cent of the telecom market but over 60 per cent of Idea's gross revenue.

Idea had recently signed an agreement with Videocon Telecommunications Limited for acquiring 'right to use' 1800 MHz spectrum under a spectrum trading agreement in two of its key leadership markets of Gujarat and Uttar Pradesh (West).
Post completion of this transaction, 4G services will be extended to 12 service areas, covering 75 per cent of Idea's revenue base in the country.

The company is also offering subscription plans for digital content, including a wide range of the latest music, movies and games.
Idea has also partnered with leading handset manufacturers and e-commerce retailers for special data bundling offers on new 4G smartphones, he said.

The operator today expanded its 4G services to six more cities in Kerala -- Kollam, Kannur, Kottayam, Palakkad, Tiruvalla and Changanassery -- targetting to cover all 14 districts in the state by March this year.
"The implied enterprise value is Rs 828 billion (USD 12.4
billion) for Vodafone India and Rs 722 billion (USD 10.8 billion) for Idea," the filing said.
Idea and Vodafone in a joint statement said that merged entity will be jointly controlled by Vodafone and Aditya Birla group as per shareholders agreement.
Vodafone will own 45.1 per cent of the combined company after transferring a stake of 4.9 per cent to the Aditya Birla group for Rs 3,900 crore in cash concurrent with completion of the merger, the filing said.

Idea will hold 26 per cent of the combined entity while the rest will be owned by public shareholders.
The Aditya Birla Group will have the right to acquire more shares from Vodafone under an agreed mechanism with a view to equalising the shareholdings over time, the joint statement said.
The merger will result in substantial cost and capex synergies with an estimated net present value of approximately USD 10 billion after integration costs and spectrum liberalisation payments, with estimated run-rate savings of USD 2.1 billion on an annual basis by the fourth full year post completion, the statement said.

Vodafone India will be deconsolidated by Vodafone on announcement and reported as a joint venture post-closing, reducing Vodafone Group net debt by approximately USD 8.2 billion.
The statement said that if Vodafone and the Aditya Birla
Group's shareholdings in the combined company are not equal after four years, Vodafone will sell down shares in the combined company to equalise its shareholding to that of the Aditya Birla Group over the following five-year period.
Until equalisation is achieved, the voting rights of the additional shares held by Vodafone will be restricted and votes will be exercised jointly under the terms of the shareholders' agreement.

Given the present spectrum holding, revenue and subscriber base, both the companies need to work on synergy to comply with rules.
According to the merger and acquisition rules, an entity should not hold more than 25 per cent spectrum allocated in a telecom circle and 50 per cent of spectrum allocated in a particular band in a service area.
The merged entity should also not have more than 50 per cent revenue and subscriber market share.
As per CLSA report, the merged entity would breach revenue market share, subscriber and spectrum caps in five markets.
The combined entity as per present scenario will breach spectrum cap in 900 Mhz band in Maharashtra, Gujarat, Kerala, Haryana and UP West and in 2500 Mhz band in Maharashtra and Gujarat, it said.

CLSA estimated that the excess spectrum which would need to be surrendered or sold off is valued around Rs 5,400 crore and for the merger both the companies will also have to shell out Rs 5,700 crore for liberalising radiowaves that they were allocated administratively.