British telecom company Vodafone Plc announced the merger of its Indian wireless telephony businesses, with the Aditya Birla Group‘s Idea Cellular creating the largest telecom operator in the country, with a base of 400 million subscribers and 1,850 MHz of spectrum ownership. “India was earlier the jewel in our crown. Now with this merger, we have got a bigger jewel,” Vodafone Group Plc CEO Vittorio Colao said, adding: This is our Make in India initiative.
Initially, Idea Cellular and Vodafone India will merge their operations at a swap ratio of 1:1. Then, Birla’s holding companies will buy a 4.9 percent stake from Vodafone at $1.6 per share, investing close to $600 million. This will increase Idea’s stake to 26 percent and bring down Vodafone Plc’s stake to 45.1 percent. The Birlas will have the right to acquire another 9.5 percent stake from Vodafone in the next four years, so that both partners eventually hold an equal stake in the company (about 35.5 per cent each), reports Business Standard.
According to the agreement between Vodafone and Idea, the implied enterprise value for Vodafone is $11.5 billion. The merger will take at least a year and a half to complete and both companies will operate as independent entities till this goes through.
