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India now has a new leader in the mobile operator segment with the merger of Vodafone India and Idea Cellular officially announced. To be called Vodafone Idea Ltd, the operator has a subscriber base of over 408 million overtaking Bharti Airtel.
The new board of directors comprising 12 directors (including 6 independent directors) has been constituted, with Kumar Mangalam Birla as the Chairman. The board has appointed Balesh Sharma as the CEO.
Revenue market share
The merged entity has a pan India revenue market share of 32.2 per cent. It has a large spectrum portfolio of ~1850 MHz and an adequate number of broadband carriers and distribution reach with over 1.7 million retailers and ~15,000 branded stores to service customers.
Both Vodafone and Idea brands, which have strong consumer affinity across metro, urban, rural and deep interior markets, will continue to operate.
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.
Equity infusion
The equity infusion of Rs 6,750 crore in Idea and Rs 8,600 crore in Vodafone coupled with the monetisation of standalone towers of both the companies for an enterprise value of Rs 7,850 crore, provides the company a strong cash balance of over Rs 19,300 crore post payout of Rs 3,900 crore to the DoT.
Additionally, the company has an option to monetise an 11.15 per cent stake in Indus, which would equate to a cash consideration of Rs 5,100 crore. As at 30 June 2018, the net debt was Rs 1,09,200 crore.
On the occasion of the merger, Kumar Mangalam Birla, Chairman, Aditya Birla Group, and Vodafone Idea Ltd, said: “Today, we have created India’s leading telecom operator. It is truly a historic moment.”
Balesh Sharma, CEO, Vodafone Idea Ltd, said, “As India’s leading telecom operator with two popular and loved brands, the company has the scale and resources to ensure sustainable customer choice and introduce new technologies. ''
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