The merger of Idea Cellular and Vodafone India has been completed, the two telecommunication majors said on Friday. The merged entity, Vodafone Idea Ltd, is India’s biggest telecom service provider with over 408 million subscribers. With this, the telecom market now has three private players – Bharti Airtel, Vodafone Idea and Reliance Jio.
A new board has been formed for the merged entity with 12 directors, which includes six independent ones. Himanshu Kapania stepped down as the managing director of Idea Cellular with effect from Friday. He will serve as a non-executive director of the new company.
Kumar Mangalam Birla is the chairperson of Vodafone Idea Ltd, while Balesh Sharma is the chief executive officer. “Today, we have created India’s leading telecom operator,” said Birla. “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 combined operations of Idea and Vodafone will be worth more than $23 billion (over Rs 1.5 lakh crore), with a 32.2% market share. “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 two companies said in a joint statement, according to PTI.
The merger saves both debt-ridden firms from competition in the market. The combined debt of both firms is estimated to be about Rs 1.15 lakh crore. “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,” the statement said.