Mumbai, March 20 (PTI): The Indian unit of British telecom major Vodafone and Aditya Birla group’s Idea Cellular on Monday announced the merger of their operations, creating the country’s largest mobile operator by customer and revenue market share.
The merged entity, which will come into force over the next two years, will be headed by Idea’s Kumar Mangalam Birla as Chairman.
Vodafone will have its nominee as the chief financial officer, its CEO Vittorio Colao said here at a press meet, which was also attended by Birla.
The all-share merger for both partners excludes Vodafone's 42 per cent stake in Indus Towers and will be effected through issuing new shares in Idea to Vodafone and result in Vodafone deconsolidating Vodafone India.
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.
Idea will hold 26 per cent of the combined entity while the rest will be owned by public shareholders.
Idea and Vodafone said the merged entity will be jointly controlled by Vodafone and the Aditya Birla group according to a shareholders' agreement.
With 204.68 million customers, Vodafone has a market share of 18.16 per cent. Idea has 16.9 per cent with 190.51 million customers as of December 2016, according to the Telecom Regulatory Authority of India data.
Airtel, with a market share of 23.58 per cent and a customer base of 265.85 million, leads the market both in terms of revenue and customer base.
According to CLSA report in January, the merged entity will have revenue of over Rs 80,000 crore, translating into a 43 per cent share by revenue and 40 per cent by active subscriber base with around 400 million customers.
The combined venture will account for over 25 per cent of the allocated spectrum and will have to sell about one per cent (worth Rs 5,400 crore) to comply with spectrum cap norms.
(This report was updated at 3.30pm.)