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