New Delhi: The government on Thursday approved the merger of Vodafone and Idea Cellular, creating the country's largest mobile operator with about 35 per cent market share and nearly 430 million subscribers.

The new telecom behemoth - Vodafone Idea Limited - will dislodge Bharti Airtel, the current market leader with 344 million customers, from its pole position.

A senior DoT official said the two entities will now apprise the Registrar of Companies (RoC) of the various approvals received, wrapping up the last leg of formalities.

Aditya Birla Group chairman Kumar Mangalam Birla on Thursday said he was "very optimistic" about the two firms coming together. "Yes we have received the final approval from the department of telecom," Birla said in response to a query at group company Hindalco's press conference.

Birla's response is the first official confirmation by the group about the government nod. "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 - at present chief operating officer of Vodafone India - will be the new CEO of the merged entity, which will remain listed.

The approval comes with the riders that the merged entity will have to abide by the decisions of the telecom tribunal and other courts.

The Department of Telecom (DoT) had given a conditional approval to the merger of these companies on July 9 and had asked them to meet the demands raised for taking the merger on record.

Following this, Idea Cellular and Vodafone India made a joint payment of Rs 7,268.78 crore "under protest" to the government. This included Rs 3,926.34 crore paid in cash and Rs 3,342.44 as bank guarantees.

The merger is expected to bolster the efforts of Idea Cellular and Vodafone to take on the intense competition in the market where the entry of Reliance Jio - backed by India's richest man Mukesh Ambani - has led to a bruising tariff war.

Vodafone will own 45.1 per cent in the combined entity, while Aditya Birla Group will have 26 per cent and Idea shareholders 28.9 per cent.

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 overtime.