Idea Cellular merger: 12 things you need to know about Vodafone

Market Live Sensex Nifty lower on profit booking Idea up 15% on Vodafone merger

Jio has made an impact with free voice calls and cut-price data services, forcing India's three biggest operators - Bharti Airtel (BRTI.NS), Vodafone and Idea - to slash prices and accept lower profits.

"The combined company would become the leading communications provider in India with nearly 400 million customers, 35 per cent customer market share and 41 per cent revenue market share", it added.

"We will have the opportunity to create a very strong management team, thanks to the combined expertise of both companies, he said".

Idea and Vodafone said the merged entity will be jointly controlled by Vodafone and the Aditya Birla group as per shareholders' agreement.

Colao also said the merger makes possible synergies of Dollars 10 billion.

The company said that it will issue an aggregate number of equity shares of the new company to Vodafone India Ltd equal to 47% of the post issue paid-up capital.

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As far as the appointments of CEO and COO, both the companies should approve the choice. Kumar Mangalam Birla will be the new chairman of the merged entity, while Vodafone will appoint the CFO.

Vodafone India will be deconsolidated by Vodafone and reported as a joint venture post-closing, reducing Vodafone Group's net debt by around Dollars 8.2 billion.

The combined Vodafone-Idea group would have nearly 400 million customers, or 35 percent market share, with an implied enterprise value of 828 billion rupees ($12.66 billion) for Vodafone and 722 billion rupees for Idea.

Following the transaction, Vodafone will take control of 45.1 percent of the combined company, after selling a 4.9 percent stake in the new entity to billionaire Kumar Mangalam Birla's holding companies. The scheme of amalgamation includes Vodafone India (VIL) and its wholly-owned subsidiary Vodafone Mobile Services (VMSL) merging with the new company. The merger makes possible synergies of United States dollars 10 billion, Colao added. Its shares were trading up 0.06 per cent at Rs 347 per scrip at the BSE, while Reliance Communications was down by 0.39 per cent at Rs 38.10 per share. In order to get the decision executed, the companies will require shedding some spectrum and subscribers to make sure that the regulatory approvals under the competition rules in India are complied with.

Undercutting rivals in such a competitive markets left few options but to cut costs through mergers, with Bharti Airtel - the country's largest telecoms operator - having also recently agreed to buy Norwegian firm Telenor's Indian arm.

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