Vodafone Indian Operations to merge with rival Idea Cellular

The Vodafone Group announced on Monday that it was merging its Indian operations with competitor Idea Cellular to create a new giant in India's telco space, boasting over 400 million customers.

Birla is slated to be the chairman of the new entity.

"The combined entity will become the leading challenger with the scale to compete more effectively", Idea said in a statement.

The merged venture will create India's largest mobile operator with nearly 400 million users and a 35 per cent market share by customers.

Vodafone is to merge its Indian operation with Idea Cellular in a deal that will create the Asian country's biggest telecoms firm.

Idea Cellular Limited in a BSE filing on Monday said that the Board of Directors of the company have approved its merger with Vodafone. The deal gives Vodafone India an implied enterprise value of Rs 82,800 crore and Idea an enterprise value of Rs 72,200 crore.

Vodafone will own 45.1 per cent in the new company after transferring 4.9 per cent to the Aditya Birla group for Rs 3,874 crore in cash concurrent with completion of the merger.

The new player in the market, Reliance Jio, is owned by Mukesh Ambani, India's country's richest man.

Vodafone, the world's second-largest cellphone operator, will maintain a 42% stake in Indus Towers after the merger is complete, MarketWatch and others report. Both Vodafone and the Aditya Birla Group will jointly agree on the appointment of the Chief Executive Officer and the Chief Operating Officer.

As per IBEF, India is now the second-largest telecommunication market and has the third highest number of internet users in the world.

The move follows the launch of Reliance Industries' Jio business previous year, which has pressured the country's telecoms market.

Vodafone India said the merger would generate cost savings of about $2 billion annually by the fourth year after the deal.

  • Zachary Reyes