Just months after Mukesh Ambani-led Reliance Industries Ltd (RIL) entered India's fast growing telecom services market and declared all-out war on the top players — Sunil Bharti Mittal-led Airtel, British telecom MNC Vodafone and Kumar Mangalam Birla-led Idea Cellular — by offering consumers unlimited free calls and 4G data use, there was another corporate mega-coup on Monday.
During an action-packed — and historic —day, Vodafone and Aditya Birla Group-run Idea Cellular announced the merger of their operations, creating the largest mobile operator both by customer and revenue market share. Kumar Mangalam Birla will be Chairman of the merged entity, which will come into force over the next two years, while a Vodafone nominee will be CFO, said Vodafone CEO Vittorio Colao at a Press meet here which was attended by Birla too.
The all-share merger for both partners will be effected through issuing new shares in Idea to Vodafone and result in Vodafone deconsolidating Vodafone India. Vodafone will own 45.1 per cent in the new company after transferring 4.9 per cent to the Aditya Birla group for Rs 3,874 crore in cash concurrent with completion of the merger. Idea will hold 26 per cent of the combined entity while the rest will be owned by public shareholders.
Idea and Vodafone said that the merged entity will be jointly controlled by Vodafone and the Aditya Birla Group as per shareholders' agreement. With 204.68 million customers, Vodafone enjoys market share of 18.16 per cent while Idea has 16.9 per cent with 190.51 million customers as of December 2016. Thus, with a combined market share of 35.06 per cent, they will, in one deft stroke, be way ahead of current market leader Airtel, which has a 23.58 per cent share (265.85 million customers). The merged entity will also have revenue of over Rs 80,000 crore, translating into a 43 per cent market share.