Mumbai/New Delhi: Aditya Birla Group Chairman Kumar Mangalam Birla on Thursday said the government has given final approval to the Vodafone - Idea Cellular merger marking the beginning of an "exciting journey".
Birla said he is "very optimistic" about the two firms coming together, creating India's largest mobile operator worth over $23 billion (or over Rs 1.5 lakh crore), with 35 per cent market share and a subscriber base of around 430 million.
"Yes we have received the final approval from the Department of Telecom," Birla said in response to a query at group company Hindalco's conference.
Birla's response is the first on-record confirmation by the group about the government nod.
Quoting official sources, PTI had reported earlier in the day that the government has accorded final approval to the merger.
"It is a very exciting journey ahead of us in the sense of Idea and Vodafone coming together. The actual work starts now so we will see...we are very optimistic about it," Birla said.
Birla will be the non-executive Chairman and Balesh Sharma — currently chief operating officer of Vodafone India — will be the new CEO of the merged entity, which will remain listed.
On how long it will take for the merged entity to be operational, Birla said it would take "a few weeks". He said the companies are yet to decide on the branding for the new entity.
In March 2017, the two companies had announced that the UK-based Vodafone will combine its Indian operations with Idea Cellular, which is a listed firm of the Aditya Birla group.
The companies had said that the "highly complementary combination" will create India's largest telecoms operator with widest mobile network.
They had said that the "merger of equals with joint control of the combined company" will lead to substantial cost and capex synergies — close to $10 billion over the coming years.
After facing several delays - the companies had initially hoped to close the deal by June this year.
They received conditional nod from the DoT on July 9 for the merger.
Idea Cellular and Vodafone were asked to meet the demand raised for taking merger on record and earlier this week they made a joint payment of Rs 7,248.78 crore under protest to DoT as one time spectrum charge.
"Idea Cellular and Vodafone have made payment under protest as demanded by the DoT for the merger. Rs 3,926.34 crore have been paid in cash and bank guarantee of Rs 3,322.44 crore have been furnished," an Idea Cellular official had said.
The new numero uno of the Indian telecom market - which is the world's second largest in terms of subscriber base - will topple the Bharti Airtel from the current pole position.
The merger is expected to give the merged entity additional firepower to tackle competition in the Indian telecom market where Reliance Jio has led a relentlessly bruising price war.
The combination will have the capacity to provide 4G spectrum in all telecom circles of the country. According to a presentation by Idea, the combined 4G spectrum of both the companies is capable of offering up to 450 megabit per second broadband speed on mobile phones in 12 Indian markets.
The combined debt of both the companies is estimated to be around Rs 1.15 lakh crore.
As per the merger blueprint, Vodafone will own 45.1 stake in the combined entity, while Kumar Mangalam Birla-led Aditya Birla Group would have 26 per cent and Idea shareholders 28.9 per cent.
The Aditya Birla Group has the right to acquire up to a 9.5 per cent additional stake from Vodafone under an agreed mechanism with a view to equalising the shareholdings over time.
If Vodafone and the Aditya Birla Group's shareholdings in the combined company are not equal after four years, Vodafone will sell shares in the combined company to equalise its shareholding to that of the Aditya Birla Group over the following five-year period.
Until that equalisation is achieved, the voting rights of the additional shares held by Vodafone will be restricted and votes will be exercised jointly under the terms of the shareholders' agreement.
Comments
0 comment