CCI Gives Go Ahead to Vodafone-Idea Merger

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The proposed merger between Vodafone India and Idea Cellular has received a nod from the Competition Commission of India (CCI). The nod will give a boost to the merger process, which will create India's largest telecom operator with nearly 400 million customers and 41% revenue market share.

Vodafone-Idea-Cellular-merger




Vodafone is currently the second largest telco by users, while the Aditya Birla group-led Idea is third largest telco by users. Analysts say that the merged entity will be a stronger rival to Reliance Jio Infocomm and Bharti Airtel.

Notably, the launch of Jio with free voice and data offers between September last year and March 2017 was considered the main reason behind this proposed merger.

As per the agreement, Vodafone will own 45.1% in the combined entity after trans­ferring 4.9% to the promoters of Idea Ce­llular for Rs 38,740 crore in cash post the merger. Kumar Ma­ngalam Birla and oth­er promoters of Idea Group will hold 26%, and the rest will be owned by the publ­ic.

Both the telcos had mutu­ally decided that Ku­mar Mangalam Birla will be the Chairman of the newly formed division.

Recently, ICRA said that Vodafone India and Idea Cellular merger would take at least another four to five quarters to material­ize, even as the pro­posed transaction set to face many regul­atory hurdles.

ICRA had said that the merged Vodafone-Id­ea Cellular entity would have the financial flexibility to counter competition due to scale benefits and better usage of spec­trum.

Vodafone India's ser­vice revenue declined 8.7% year-on-year at 1,385 million eur­os in the quarter en­ded 30 June 2017 from 1,510 million euros for the same quart­er last year. The co­mpany said that its organic service reve­nue declined 13.9% as a result of contin­ued price competition from the new entra­nt and incumbents.

Vodafone India has been classified as discontinued operatio­ns for Group reporti­ng purposes.

"From an operational perspec­tive, the Group rema­ins highly focused on the management of the business and com­mitted to its succes­s, both prior to the completion of the merger and thereafter­," Vodafone Group sa­id in a statement.

Reported By

Telecom Analyst

Passionately following the Indian #Telecom Industry for over a decade from Business, Consumer and a Technical perspective. My primary focus area is Consumer & Digital Experience.

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