Voda-Idea completes $23.2-bn merger deal

Idea Cellular and Vodafone on Friday announced completion of the $23.2 billion (approximately Rs 1.6 lakh crore) merger of their India operations to create the country's largest telecom operator to take on competition from Reliance Jio.

The merged entity, called Vodafone Idea, will have a subscriber base of over 40.8 crore and a market share of over 35 per cent, overtaking Bharti Airtel to take numero uno spot, the two firms said in a joint statement.

Kumar Mangalam Birla, chairman of the Aditya Birla Group that owned Idea Cellular, will be chairman of the new company that will have a 12-member board of directors, it said.

Vodafone has a right to appoint the chief financial officer, and the two firms have together chosen Balesh Sharma as the CEO of the new company.

Himanshu Kapania has stepped down as managing director of Idea Cellular, but will continue as a non-executive director on the merged entity's board.

The merger puts Vodafone India and Idea in a strong position to cut costs and thus compete effectively with Reliance Jio. Savings from the deal are estimated at Rs 14,000 crore.

Telecom sector has witnessed consolidation aimed at finding economies of scale after Reliance Jio ploughed $25 billion into a pan-India national 4G data service, offering free voice call and tariffs well below prevailing rates. Jio has amassed 230 million subscribers in two years of its launch.

Bharti Airtel fired the starting gun with the acquisition of the Indian business of Norway-based Telenor. It subsequently took over consumer mobile businesses of Tata Teleservices (TTSL) and Tata Teleservices Maharastra (TTML). Mobile markets in several parts of the world have been rocked by cheap upstarts, including T-Mobile in the US, Iliad in France and Hong Kong group CK Hutchison's Three unit in other European markets.

"On Friday, we have created India's leading telecom

operator. It is truly a historic moment. And this is much more than just about creating a large business. It is about our vision of empowering and enabling a new India and meeting the aspirations of the youth of our country," said Birla.