Vodafone Group close to finalise Idea merger deal worth £21 billion: Report

Vodafone Group may announce its final agreement to merge its Indian operation with rival mobile operator Idea Cellular in a £21 billion deal in a few days, UK’s Telegraph reported. The publication’s sources said that Vodafone and Aditya Birla Group talks had reached an advanced stage and that an agreement “could be announced this week.” They, however, said that the deal negotiation has proven to be complicated and delicate for Vodafone, which might result in delays.

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Under the deal, Vodafone and Aditya Birla Group, which is Idea Cellular’s controlling shareholder, will hold equal stake over the combined company. “The structure a “face-saving” move to preserve Birla family pride – under a simpler deal they would be the junior partner in a joint venture,” the publication sources said.

Vodafone Group plans to deconsolidate its Indian subsidiary from its accounts, in a move to take its debts off the main company balance sheets, the report said. It added that both Vodafone India and Idea are worth about £5 billion with the remainder of the deal value made up by debts, the report said.

Rating agency Fitch in a recent note said that the combined entity of Vodafone India and Idea Cellular would have a more balanced subscriber mix, as the current second largest telco is strong in urban areas whereas the Aditya Birla Group telco focuses more on the rural mass market,

The proposed merger would also help both the telecom operators withstand intense price competition brought by Reliance Jio in the Indian telco market. The merger, however, is unlikely to lead to increased pricing power for operators in the short term, the agency said.

Fitch had estimated that the merger would create an entity with 390 million subscribers, a leading revenue market share of around 40%, revenue of $11billion-$12billion, and an EBITDA margin of about 28%-30%.

The agency also said that the proposed merger would also create significant opportunities for capital expenditure (Capex) savings by eliminating duplicate network investments and avoiding future spectrum auctions, given the combined entity should have sufficient spectrum portfolio to expand 3G/4G services across 22 Indian regional markets – or ‘circles’.

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46 Comments on "Vodafone Group close to finalise Idea merger deal worth £21 billion: Report"

 

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jiolover.
March 13, 2017 2:02 pm 2:02 PM

it may be voda-idea ?

Sasi Mesiri
March 13, 2017 10:24 pm 10:24 PM

No, Ifone. 😀

Unknown
March 13, 2017 12:06 pm 12:06 PM

Their name will be Idea cellular as idea is registered on BSE. And Vodafone wants to get listed on BSE that’s why they choose idea.

Shivang Singh(SS)
March 13, 2017 9:21 am 9:21 AM

Why i get the strong feeling that they will retain the Vodafone name considering the fact that Vodafone is sort of a bigger partner and Vodafone brand is much bigger than Idea.

Sunny | Lucknow
March 13, 2017 12:12 pm 12:12 PM

It could just be Vodafone-Idea, like Hutchison Essar of the old days. Both are big brands, none can afford to lose their identities.

Shubh
March 13, 2017 10:30 am 10:30 AM

According to brand value report, idea is 13th most popular brand in india, most popular telco after airtel. The gap between their user base is shrinking, if idea continuse to add users by the rate of 6 million/ month idea would have more users than vodafone. Lastly it is very popular in rural masses and vodafone is difficult to recognize for many of them so there is much greater chance of idea name being Used

Saket
March 13, 2017 9:23 pm 9:23 PM

Idea started with just few, specifically 2 circle , when it was AT&T .

Now within 15-17 years after acquiring rpg, escotel, spice and now vodafone.

It’s number 1 player in india,which nobody would have thought.

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