Axiata poised to be financial investor in one of world’s largest telcos

KUALA LUMPUR: India has approved the merger between Idea Cellular Ltd, Vodafone India Ltd and Vodafone Mobile Services Ltd to create the country’s largest telecommunication company.

Axiata Group Bhd, which had 16.33 per cent stake in Idea prior to the merger, said this would make it a financial investor in one of the world’s largest telecommunications operators.

The merged entity, Vodafone Idea Ltd, will serve 440 million customers, representing 39 per cent of the total market share, while its revenue market share is estimated at 37.5 per cent.

“Its revenue is forecast to be in excess of US$10 billion (RM40.62 billion). The merger will strengthen Vodafone Idea’s position to compete effectively in a now mainly three player market with immediate synergistic benefits to be realised from the best spectrum position and other operational efficiencies,” Axiata said in a statement.

Axiata was originally a strategic investor in Idea with about 20 per cent stake over the last 10 years. The merger would dilute its stake to 8.17 per cent.

Axiata president and group chief executive officer Tan Sri Jamaludin Ibrahim said since its initial investment in 2008, with Idea being a high performing asset in its portfolio, the group had gained from high-growth years in India’s telecom industry.

It benefitted from Idea’s performance to become the third largest player from the fifth largest. “It was arguably the best performer within the industry till 2016 when Jio (Reliance Jio Infocomm) started to disrupt the entire market.”

Jamaludin also said Axiata had no immediate plans to divest or exit Idea. “We have a very strong cash position and have no immediate plans to divest or exit, as long as there are no better alternative use of funds that would provide better returns to our shareholders.”