The process of merging for Idea Cellular and Vodafone India had now been completed resulting in the creation of biggest telecom service provider in India with more than 408 million subscribers, the two companies announced today.

The merged entity “Vodafone Idea Ltd” has also got a new board with 12 directors (including six independent directors) and Kumar Mangalam Birla as its Chairman. The board has also appointed Balesh Sharma as the new CEO,  as per a joint statement issued by the combined two companies. Presently, the combination of two companies will have all India revenue market share of 32.2 percent and take the numero uno slot in nine telecom circles, the statement said while adding that both Vodafone and Idea brands will continue as it is. The merger will topple Bharti Airtel from its present pole position and have ample opportunity to challenge in the Indian telecom market competition which has further intensified with the aggressive entry of Reliance Jio. The combo-companies will have a broadband network of 3.4 lakh sites and distribution network of 17 lakh retail outlets.

“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 statement said. The net debt of the company stood at Rs. 1,09,200 crore on June 30, 2018. “The equity infusion of Rs. 6,750 crore at Idea and Rs. 8,600 crore at Vodafone, coupled with the monetization of standalone towers of both companies for an enterprise value of Rs. 7,850 crore, provides the company with a strong cash balance of over Rs. 19,300 crore post-payout of Rs. 3,900 crore to the Department of Telecom (DoT),” the statement said.

In addition to that, the joint statement said, that the company has an option to monetize more than 11 percent stake in Indus (the tower company), with a cash consideration of Rs. 5,100 crore. The duo-partnership will have a wide spectrum portfolio of approx. 1,850 MHz, more than 2 lakh mobile sites and more than 2.35 lakh km of fiber.

This will give it a chance to offer “superior voice and broadband connectivity across the country, covering 92 percent of the population and reaching nearly 5,00,000 towns and villages,” it said. Kumar Mangalam Birla, Chairman Aditya Birla Group, and Vodafone Idea Limited said, “Today, we have created India’s leading telecom operator. 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”. Balesh Sharma, CEO of the new entity said, “We are committed to offering both our retail and enterprise customers an excellent experience while fulfilling their evolving digital and connectivity needs via new products, services, and solutions”. A regulatory filing by Idea said it will be renamed as Vodafone-Idea Ltd, following the completion of all kind of formalities and approvals.

The paid-up equity share capital of Idea Cellular, post-merger, stands increased to Rs. 8,735.13 crore. As of now Himanshu Kapania has stepped down from the post of Managing Director of Idea Cellular with effect from August 31, 2018, but is said to be serving as non-executive director of the new company. On BSE, shares of Idea Cellular were trading 1.10 percent higher at Rs. 50.40 a piece on BSE.

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