New Delhi,jul 11:
The telecom ministry (DoT) on Monday approved the merger of Vodafone India and Idea Cellular that will create the country’s largest mobile services operator, an official source said.
“DoT has cleared the Vodafone-Idea merger today. They will have to meet conditions for final approval,” the source told PTI. The department has asked Idea Cellular to pay Rs 3,926 crore in cash for Vodafone spectrum and furnish a bank guarantee of Rs 3,342 crore, the source further said.
The combined operations of Idea and Vodafone will create the country’s largest telecom operator worth over USD 23 billion (or over Rs 1.5 lakh crore), with a 35 per cent market share and a subscriber base of around 430 million.
The merger is expected to give breather to both debt-ridden firms Idea and Vodafone, from cut-throat competition in the market where margins have hit rock bottom with free voice calls. The combined debt of both the companies is estimated to be around Rs 1.15 lakh crore.The combined debt of both the companies is estimated to be around Rs 1.15 lakh crore.
Vodafone will own 45.1 per cent stake in the combined entity, while Kumar Mangalam Birla-led Aditya Birla Group would have 26 per cent and Idea shareholders 28.9 per cent.
The Aditya Birla Group has the right to acquire up to a 9.5 per cent additional stake from Vodafone under an agreed mechanism with a view to equalising the shareholdings over time. If Vodafone and the Aditya Birla Group’s shareholdings in the combined company are not equal after four years, Vodafone will sell down shares in the combined company to equalise its shareholding to that of the Aditya Birla Group over the following five-year period.
Until equalisation is achieved, the voting rights of the additional shares held by Vodafone will be restricted and votes will be exercised jointly under the terms of the shareholders’ agreement.
New Delhi,jul 11: