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Idea Cellular completes merger with Vodafone India after NCLT nod

Balesh Sharma has been appointed chief executive officer of the merged entity with effect from August 31

Reuters 

Vodafone Idea

The merger of Cellular and India has been completed, creating India's biggest service provider with over 408 million subscribers, the two said today.

A new board has been constituted for the merged entity "Ltd' with 12 directors (including six independent directors) and Kumar Mangalam Birla as its Chairman. The board has appointed as the CEO, the said in a joint statement.

The combination will have all India revenue market share of 32.2 per cent and take the numero uno slot in nine circles, it said adding that both and brands will continue.

The giant will topple from its current pole position, and will have the firepower to take on competition in the Indian telecom market, which has intensified with the aggressive entry of Reliance Jio.

It will have a broadband network of 340,000 sites and distribution network with 17 lakh retail outlets.

"The merger is expected to generate Rs 14,000 crore annual synergy, including opex synergies of Rs 8,400 crore, equivalent to a net present value of approximately Rs 70,000 crore," the statement said.

The net debt of the company stood at Rs 1,09,200 crore on June 30, 2018.

"The equity infusion of Rs 6,750 crore at Idea and Rs 8,600 crore at Vodafone, coupled with monetisation of standalone towers of both for an enterprise value of Rs 7,850 crore, provides the company a strong cash balance of over Rs 19,300 crore post payout of Rs 3,900 crore to the Department of Telecom (DoT)," the statement said.

Moreover, it added, the company has an option to monetise over 11 per cent stake in Indus (the tower company), amounting to a cash consideration of Rs 51 billion.

The combination will have a wide spectrum portfolio of about 1,850 MHz, over 200,000 mobile sites and about 2,35,000 kms of fibre. This will allow it to offer "superior voice and broadband connectivity across the country, covering 92 per cent of the population and reaching nearly 5,00,000 towns and villages," it said.

Kumar Mangalam Birla, Chairman Aditya Birla Group and Vodafone Idea Limited said, "Today, we have created India's leading telecom operator. It is truly a historic moment...As Vodafone Idea, we are partnering in this initiative by building a formidable company of international repute, scale and standards".

Balesh Sharma, CEO of the new entity said, "We are committed to offer both our retail and enterprise customers an excellent experience while fulfilling their evolving digital and connectivity needs via new products, services and solutions".

A regulatory filing by Idea said it will be renamed as Vodafone Idea Ltd, following the completion of all formalities and approvals. Post merger, the paid-up equity share capital of Idea Cellular stands increased to Rs 87,35 billion.

Himanshu Kapania has stepped down from the position of Managing Director of Idea Cellular with effect from August 31, 2018, but shall serve as non-executive director of the new company.

Shares of Idea Cellular were trading 1.10 per cent higher at Rs 50.40 apiece on BSE.

First Published: Fri, August 31 2018. 10:48 IST
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