The merger of Idea Cellular and Vodafone India is complete, creating India’s biggest telecom service provider with over 408 million subscribers, the two companies said on Friday.
The merged entity will be called Vodafone Idea. The new board with have 12 directors (including six independent directors) and Kumar Mangalam Birla as its Chairman has been constituted. The board has appointed Balesh Sharma as the CEO, the companies said in a joint statement.
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Kumar Mangalam Birla, Chairman Aditya Birla Group and Vodafone Idea Limited said, “Today, we have created India’s leading telecom operator. It is truly a historic moment…As Vodafone Idea, we are partnering in this initiative by building a formidable company of international repute, scale and standards”.
The combination will have all India revenue market share of 32.2% and take the numero uno slot in nine telecom circles, it said adding that both Vodafone and Idea brands will continue.
Balesh Sharma, CEO of the new entity said, “We are committed to offer both our retail and enterprise customers an excellent experience while fulfilling their evolving digital and connectivity needs via new products, services and solutions”.
The new entity will topple Bharti Airtel will have the firepower to take on competition in the Indian telecom market, which has intensified with the aggressive entry of Reliance Jio.
It will have a broadband network of 3.4 lakh sites and distribution network with 17 lakh retail outlets.
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“The merger is expected to generate Rs 14,000 crore annual synergy, including opex synergies of Rs 8,400 crore, equivalent to a net present value of approximately Rs 70,000 crore,” the statement said.
The net debt of the company stood at Rs 1,09,200 crore on June 30, 2018.
“The equity infusion of Rs 6,750 crore at Idea and Rs 8,600 crore at Vodafone, coupled with monetisation of standalone towers of both companies for an enterprise value of Rs 7,850 crore, provides the company a strong cash balance of over Rs 19,300 crore post payout of Rs 3,900 crore to the Department of Telecom (DoT),” the statement said.
Moreover, it added, the company has an option to monetise over 11% stake in Indus (the tower company), amounting to a cash consideration of Rs 5,100 crore.
The combination will have a wide spectrum portfolio of about 1,850 MHz, over 2 lakh mobile sites and about 2.35 lakh kms of fibre. This will allow it to offer “superior voice and broadband connectivity across the country, covering 92% of the population and reaching nearly 5,00,000 towns and villages,” it said.
Himanshu Kapania has stepped down from the position of Managing Director of Idea Cellular with effect from August 31, 2018, but shall serve as non-executive director of the new company.