With 41% market share, Vodafone Idea merger to create India’s largest telecom company

With about 400 million customers, 35% customer market share and 41% revenue market share the Birla owned Idea Cellular and Vodafone India will create the largest mobile phone service company in India. While the Vodafone Idea merger discussions have been doing the rounds for a few months now, according to reports, the board of Kumar Mangalam Birla-owned Idea Cellular has finally approved of it.

Currently, it is estimated that Bharti Airtel with 263.35 million mobile subscribers is the largest telecom operator in India, while Vodafone has 202.79 million and Idea Cellular has 187.68 million. The proposed merger will  create an entity of around Rs. 77,500-80,000 crores – alongside eliminating duplication of spectrum and infrastructure capex.

According to a statement released, Vodafone India will invest in the new entity, aside from its investments in Indus Tower, and the renaming of the new entity will take place at a later stage.

Reportedly, post the merger, Vodafone will transfer 4.9% to Idea Cellular’s promoters for Rs. 3,874 in cash and will own 45.1% stake in the combined entity. Other promoters of Idea Group, along with Kumar Mangalam Birla will hold 26% and the public will own the rest.

The merger will not only create the largest telecom entity with 3G and 4G services that are pan-India, it will also give the new entity sufficient spectrum to be more competitive and roll out more attractive offers in the wake of competition from Reliance Jio.

While more details on the merger are expected soon, the companies are also expecting a visit by Vodafone’s CEO Vittorio Colao soon, to discuss key issues including fears any staff may have of employment after the union.