Idea Cellular has announced its merger with Vodafone India to make the country’s largest telecom network. As per the reports, the merger will be completed in 2018 and forms board of directors from both networks. The final decision on the same was pending and will be unveiled after meeting of top Vodafone executives on March 16.
The statement released states that the Promoters of Vodafone and Idea will have the right to nominate three directors each. The CFO will be a Vodafone’s nominee, and the chairman will be an Idea nominee. Both CEO and COO will be decided jointly by both the parties.
“The combined company will have the scale required to ensure sustainable consumer choice in a competitive market and to expand new technologies—such as mobile money services—that have the potential to transform daily life for every Indian. We look forward to working with the Aditya Birla Group to create value for all stakeholders,” says, Vittorio Colao, Chief Executive Officer at Vodafone Group Plc.
In the combined entity, Vodafone will hold 45 percent and the idea to hold 26 percent after the merge. On the other hand, Idea shares have observed a six-month high share value after its merge with Vodafone India. In a move to equalize the share holding over time, Idea has right to buy up to 9.5 percent additional stake from Vodafone. Voting rights of additional shares will be exercised jointly until the equalization is achieved.
The pact includes idea to contribute all its assets like 15.4k tenancies standalone towers and 11.15 percent in Indus Towers. Vodafone India will contribute standalone towers with 15.8k tenancies but no stake in Indus Towers. Also, Vodafone will pay a net debt of 25 billion rupees than the idea at completion. Post-closing, combined entity will be reported as a JV by Vodafone and accounted for the same method.