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Idea calls report of it merging with Vodafone “preposterous”

idea-cellular

Telecom operator Idea Cellular has denied that it is in “exploratory talks” for a merger with rival Vodafone, in a notification with the stock exchange. CNBC TV18 had reported that the two operators were mulling such a deal and if it were to go through it would create the largest telecom company in the country beating Airtel.

However, Idea termed the report as “absolutely untrue and preposterous” in the clarification.

The report added that Vodafone’s India operations, which is looking to hit the markets with an IPO at a $11 billion valuation, would not need to do so if it merged with Idea Cellular as it is already listed. Idea is valued at $5 billion and the combined entity would have a market capital of around $16 billion. Following the report Idea’s stock was up more than 6% to Rs 100 on the exchange at the end of the day’s close.

The telecom sector is witnessing a consolidation in recent times with operators folding their operations.

– Reliance Communication (RCOM), which earlier was in talks to merge its wireless business with Aircel, is expected to sign mandatory documents and send it for regularity approval. 

– Sistema Shyam Teleservices (SSTL), which owns the MTS brand in India,approved the merger of the company with RCOM, in April this year. They’re currently awaiting further approval from the Rajasthan and Bombay High Court, after which RCOM is expected to approach the DoT with further filings.

– In May, Airtel acquired Videocon’s spectrum in the 1800 MHz band for Rs 4428 crore across six circles including Bihar, Gujarat, Madhya Pradesh, UP (East) and UP (West). The deal between Airtel and Videocon was originally announced in March after Idea Cellular had called off an earlier deal with Videocon for the same spectrum. In November 2015, Idea had entered into an agreement with Videocon to acquire the rights to use spectrum from Videocon in the 1800 MHz band in two key circles – Maharashtra and Uttar Pradesh (West) – for Rs 3310 crore.

– In March Airtel bought 20 Mhz of spectrum in the 2,300MHz band from Aircel for Rs 3,500 crore, The deal allowed Airtel to offer 4G services in the eight circles of Tamil Nadu, Bihar, Jammu and Kashmir, West Bengal, Assam, the North East, Andhra Pradesh and Odisha.

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