Vodafone wins approval for merger with Indian rival

VODAFONE has won final approval for its plan to defend itself from a brutal price war in India after a merger with rival operator Idea cleared the final regulatory hurdle.

It is understood that the deal has been awarded the last in a long list of official approvals by India’s National Company Law Tribunal, to leave only bureaucratic formalities. The merger of Vodafone and Idea will create the world’s second-largest mobile operator behind China Mobile, with more than 400 million customers.

The rubber stamp means the deal, valued at around £18bn including debt, has squeaked inside a delayed completion target of the end of August. Vodafone will become the senior partner in a joint venture with Idea owner Aditya Birla Group, one of India’s powerful family controlled conglomerates.

Management of Vodafone Idea, which will be listed on the Bombay Stock Exchange, will be shared equally, but Aditya Birla Group will have a smaller shareholding.

Vodafone hopes more local ownership will help it better navigate Indian officialdom. Chief executive Vittorio Colao has repeatedly railed against political obstacles, especially in relation to a tax dispute dating back to the company’s entry into the market.

However Vodafone and Idea both sought a merger mostly as sanctuary from an all-out assault on the mobile market by Mukesh Ambani, India’s richest man. He built a new 4G network, Jio, from scratch and from 2016 gave free service to hundreds of millions of Indians to build market share.

The resulting price war put financial strain on heavily indebted rivals in a crowded field. Anil Ambani, Mukesh’s brother, was forced to sell up and exit the market. Others including Aircel, the fifth largest operator, went bust.

Vodafone has already removed its Indian operation from its balance sheet, a move designed to reduce its debt burden and shield its other operations from further upheaval in the vast Indian market.

Vodafone has also struck another deal to merge its Australian mobile operation, itself a joint venture with Hong Kong’s CK Hutchison, with fixed line broadband provider TPG.

400 million The number of customers that the enlarged group will service, making it the second-largest global mobile operator