VODAFONE AND IDEA MERGER WILL ECLIPSE OTHER BIG PLAYERS

The proposed US$23 billion merger of the telecoms companies Vodafone India with Idea Cellular to create the largest telecoms operator in India is moving closer to fruition, as the companies continue to work through clearing regulatory hurdles involved in the process.

Idea Cellular, based in Mumbai and part of the Aditya Birla Group, said it had filed an application to the National Company Law Tribunal in Ahmedabad, in the western Indian state of Gujarat, for its approval of the proposed merger.

India’s securities regulator, the securities and exchange board of India (Sebi), and the Indian stock exchanges have given their go ahead for the deal, on the condition that it passes an ongoing inquiry by Sebi, as well as gaining the approval of the shareholders and the law tribunal.

The combined Vodafone-Idea entity, once the transaction goes through, will have close to 400 million users, a 35 per cent market share, and a 41 per cent share of revenues, meaning it will eclipse Bharti Airtel, which currently has the largest subscriber base.

The Vodafone-Idea merger is also expected to help the operators compete with Reliance Jio, which entered the market last year and is rapidly gaining market share with its cut price tariffs. The deal is expected to close in 2018.

“The combined company will have the scale required to ensure sustainable consumer choice in a competitive market and to expand new technologies – such as mobile money services – that have the potential to transform daily life for every Indian,” said Vittorio Colao, the chief executive of Vodafone Group, when the plan was announced.

He said the combined company would be a “new champion” of the Indian government’s Digital India vision.

The competition commission of India gave its clearance for the merger on July 24. The merger will need to be cleared by India’s department of telecommunications.

The companies project that they could eventually save more than $2bn on an annual basis as a result of the merger on shared costs and capital expenditure.