On Thursday, the Government gave its final nod to the merger of mobile services giants Vodafone and Idea Cellular which makes India’s largest mobile operator company with about 35 percent market share and nearly 430 million subscribers.

The new behemoth company in the field of telecom sector – Vodafone Idea Limited – remove Bharti Airtel, the current market top leader with a total customer base of 344 from its pole position. A senior Department of Telecom (DoT) official privy to the development made it clear that the final approval has been given for the merger today and both the entities will now appraise the Registrar of Companies (RoC) of the various approvals received, completing the last leg of formalities.

The approval was given with some conditions that the merged entity will have to abide by all the decision of the telecom tribunal and other courts. The authority, DoT had given conditional approval for the merger of these companies on July 9 and had directed them to meet the demands made for taking merger on record. After this, Idea Cellular and Vodafone India, both of them this week made a joint payment of Rs. 7,268.78 crores ‘under protest’ to the government. This included Rs. 3926.34 crore paid in cash and Rs. 3,342.44 crore furnished as bank guarantees.

Both of the companies, Idea, and Vodafone combined will make up a telecom juggernaut worth more than USD 23 billion (or more than Rs. 1.5 lakh crores) with a 35 percent market share and a total subscriber base of around 430 million. Kumar Mangalam Birla will become the non-executive Chairman and Balesh Sharma will be the new CEO of the merged entity, which will come under the list.

The merger is thought to bolster the efforts of the debt-ridden firms Vodafone and Idea Cellular to take over the intense competition in the market where entry of Reliance Jio offered by India’s richest man – Mukesh Ambani – has finally led to a bruising tariff war. In this merger, Vodafone will own 45.1 stakes in the combined entity, while Aditya Birla Group will have a total of 26 percent and Idea shareholders 28.9 percent. Shares of Idea Cellular closed 3.64 percent higher on BSE at about Rs. 56.95 a piece.

Additionally, the Aditya Birla Group will have the right to take another state of up to 9.5 percent from Vodafone under the agreed conditions with a view to equalizing the shareholdings overtime. If it happens that Vodafone and Aditya Birla Group’s shareholdings in 2 in 1 company are not equal after four years, Vodafone will sell some of its shares in the combined company to equalize its shareholdings to that of the Aditya Birla Group for the following five-year period.

The CEO of Vodafone Group, Vittorio Colao had yesterday said that the company expects the two company merger to close in the month of August. “In India, where competition remains intense, we have now received conditional approval from the Department of Telecoms for the merger of Vodafone India and Idea Cellular, which we aim to close before the end of August, allowing us to unlock substantial synergies,” Colao had said.

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