VODA­FONE, IDEA

Deal to cre­ate In­dia’s big­gest tele­coms busi­ness amid bru­tal price war

New Straits Times - - Business -

MUM­BAI free voice calls and cut-price data ser­vices, forc­ing In­dia’s three big­gest op­er­a­tors — Bharti Air­tel, Voda­fone and Idea — to slash prices and ac­cept lower prof­its.

“Con­sol­i­da­tion is a much an­tic­i­pated and very wel­come de­vel­op­ment in this be­lea­guered tele­com sec­tor,” said Ar­pita Pal Agrawal, a part­ner and tele­com an­a­lyst at PwC In­dia.

Voda­fone has en­dured a tu­mul­tuous ride since it en­tered In­dia in 2007, with fierce com­pe­ti­tion and a high-pro­file tax bat­tle mak­ing a busi­ness con­tribut­ing more than 10 per cent of its rev­enues and prof­its its most un­pre­dictable by far.

Bil­lion­aire Kumar Man­galam Birla’s hold­ing com­pa­nies, in­clud­ing Aditya Birla Nuvo Ltd, own 42 per cent of Idea, ac­cord­ing to the com­pany’s web­site, while Ax­i­ata Group Bhd has a 20 per cent stake in the firm.

Voda­fone In­dia Ltd is a wholly owned unit of Voda­fone.

Voda­fone would own 45.1 per cent of the merged en­tity, af­ter it trans­ferred about 4.9 per cent to pro­mot­ers of Idea and/or their af­fil­i­ates for 38.74 bil­lion ru­pees in cash, said Idea.

Aditya Birla Group, the ma­jor­ity owner of Idea, will own 26 per cent while other share­hold­ers will own the re­main­ing 28.9 per cent. Aditya and Voda­fone even­tu­ally aim to own an equal share of the joint ven­ture.

The joint ven­ture will have a com­bined en­ter­prise value of US$23.2 bil­lion. Agen­cies

REUTERS PIC

Aditya Birla Group chair­man Kumar Man­galam Birla (left) with Voda­fone Group chief ex­ec­u­tive of­fi­cer Vit­to­rio Co­lao at a press con­fer­ence an­nounc­ing the merger of Voda­fone’s In­dia unit with Idea Cel­lu­lar in Mum­bai yes­ter­day.

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