British mobile phone giant Vodafone will merge its Indian unit with Idea Cellular to create the country’s largest telecoms operator. The confirmation ended months of speculation that the two operators were ready to sign a deal to help fend off the Mukesh Ambani-backed Reliance Jio, whose recent arrival has shaken up India’s ultra-competitive mobile network market. ”Vodafone Group Plc and Idea Cellular today announced that they have reached an agreement to combine their operations in India,” they said in a statement to the Bombay Stock Exchange (BSE).
”The combined company would become the leading communications provider in India with almost 400 million customers, 35% customer market share and 41% revenue market share,” the statement added. The combined Vodafone-Idea company will overtake Bharti Airtel as India’s largest network provider. Vodafone will hold 45.1% of the merged entity after it transfers a 4.9% stake to Idea backers for 39bil rupees (RM2.64bil) in cash. Idea will hold 26% in the combined company and the merger will take up to two years to complete. The agreement excludes Vodafone’s 42% stake in Indus Towers.
The merged firm will be worth US$23.2bil (RM102.80bil), based on the combined enterprise value of US$12.4bil (RM54.94bil) for Vodafone India and US$10.8bil (RM47.78bil) for Idea Cellular, according to Bloomberg News. The companies will nominate three directors each, the statement said.
Global brokerage firm CLSA has estimated that the tie-up would command a revenue market share of 43% by the start of the 2019-20 financial year, ahead of Airtel on 33%. Jio would have 13%.
Source: AFP/The Star