Kumar Mangalam Birla-led Idea Cellular has agreed to merge with Vodafone, the process which will take an year to complete. The new single entity will be the largest telecom operator in India with 400 million customers and Rs 80,000 crore of revenue. The shares in the Indian telecom market have gone up with the news of their collaboration. Before merger, Vodafone was the second largest telecom player and Idea the third largest, whereas Bharti Airtel ranked number one. “For Idea shareholders and lenders who have supported us so far, this transaction is highly accretive, and Idea and Vodafone will together create a very valuable company given our complementary strengths,” said Aditya Birla Group Chairman, Kumar Mangalam Birla, who will be the chairman of merged entity. However, Vodafone have the rights to decide it’s CFO.
The consolidation of telecom giants will have 40 crore subscribers, whereas Airtel has 46 crore subscribers. On the other hand, Reliance Jio has 10 crore subscribers. According to reports, the merger will have a balanced subscribe mix, as Vodafone has a strong hold in Urban market as compared to Idea, whose major target is rural mass market. The combined company is the outcome of Reliance Jio’s welcome offer and Happy New Year plan. Vodafone is said to have 45 percent stake in the merged company and Idea will have 26 percent, however, in the future both will have equal partnership. The deal is said to provide better 4G and 5G services in India, and improved tariff plans. “For a company with such size there will be enough growth opportunities; I don’t expect a significant downside,” Birla has said trying to downplay fears of job lay offs following the merger.
Apart from Vodafone-Idea merger, Bharti Airtel has recently acquired Telenor and Reliance communication has formed alliance with Aircel, and is now planning to join hands with Tata Teleservices as well.