Vodafone, Idea in $23bn deal to create new telecom leader
MUMBAI: Britain’s Vodafone Group and Idea Cellular agreed on Monday to merge their Indian operations in a $23 billion (£18.52 billion) deal, creating the country’s biggest telecoms business after the entry of a new rival sparked a brutal price war.
The combined entity would have almost 400 million customers, overtaking market leader Bharti Airtel to account for about 40 per cent of revenue of the world’s second-biggest mobile phone services market by users after China.
The deal underscores how India’s mobile industry is being transformed by the launch last year of Reliance Jio Infocomm’s 4G mobile broadband network.
Built at a cost of more than $20 billion by India’s richest man, Mukesh Ambani, Jio has offered free services for months. That has forced India’s three biggest operators — Bharti, Vodafone and Idea — to slash prices and accept lower profits, and sparked a wave of consolidation in the sector.
“We are very complementary,” Vodafone Chief Executive Vittorio Colao told a news conference in Mumbai after the deal was announced.
“Idea is strong where Vodafone is weaker, Vodafone is strong where Idea is weaker.”
The two companies, which announced in January that they were in talks, will have to shed spectrum in some areas to meet India’s rules, although Colao said it would be “small”. The deal is expected to close in 2018.
Shares in Idea rose as much as 14.3 per cent immediately after the news but then fell 9 per cent as traders said the implied deal price for Idea was well below the stock’s close on Friday. Vodafone shares were flat in London trading as of 09:42 GMT.