Almost on the verge of merging and forming the country’s biggest telecom operator, Idea Cellular and Vodafone together have paid Rs 7,248.78 crore to the Department of Telecom for clearance on the merger.
“Idea Cellular and Vodafone have made payment under protest as demanded by the DoT for the merger. Rs 3,926.34 crore have been paid in cash and bank guarantee of Rs 3,322.44 crore have been furnished,” an Idea Cellular official stated.
The Department of Telecom approved the merger of these two telecom companies on July 9 and ordered both telecoms to fulfill the demand in order to proceed further with the merger.
Idea Cellular and Vodafone Merger
The merger of Idea and Vodafone will end up in the country’s largest telecom operator worth over USD 23 billion (or over Rs 1.5 lakh crore). The organization will own 35 percent market share and around 430 million subscriber base.
Seeing the cutting edge competition in the Indian telecom sector this merger of Vodafone and Idea will provide them to stay strong in the market.
They will be able to work together towards better scheme and plans for customer satisfaction in the telecom sector with free voice calls.
The merged venture will be providing 4G spectrum in all telecom circles across the country. Both companies have the ability to offer up to 450 megabits per second broadband speed on mobile phones across 12 Indian markets.
Vodafone and Idea paid the Joint debt of Rs 1.15 lakh crore
The merger of Vodafone and Idea will make Bharti Airtel lose it place as the biggest telecom operator in India.
The collective debt of both the companies is projected to be about Rs 1.15 lakh crore.
As for the stake ownership, Vodafone will own 45.1 stakes in the combined entity, while Kumar Mangalam Birla-led Aditya Birla Group would own 26 percent and Idea shareholders 28.9 percent.
Aditya Birla Group will acquire up to a 9.5 percent added stake
According to the PTI, the Aditya Birla Group will acquire up to a 9.5 percent added stake from Vodafone under an agreed mechanism with a view to equalizing 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 equalize its shareholding to that of the Aditya Birla Group over the following five-year period
Until equalization 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.
The merger of these two telecom operators is surely going to increase the bar of competition in the already competitive market.