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Vodafone–Idea Merger: Idea Cellular receives DoT approval for 100% FDI

Idea Cellular has received approval from the Department of Telecom to increase its FDI limit to 100% from 67.5%. The company says that this approval is for the total foreign investment of upto 100% in Idea Cellular Ltd., “and total indirect FDI in its relevant subsidiaries – Aditya Birla Telecom Ltd. and Idea Cellular Infrastructure Services Ltd.” The Vodafone–Idea merger has already received statutory approvals from SEBI (August 2017), NSE, BSE, CCI (July 2017), National Company Law Tribune Mumbai and National Company Law Tribune Ahmedabad.

The merger of Vodafone India with Idea Cellular is in the final leg of regulatory approvals and is expected to complete in the first half of this calendar year, subject to the final approval from the DoT.

In an earlier notification to the stock exchange, Idea Cellular said that it is holding an extraordinary general meeting on the 26th of June, with the intent of changing the name of the company to Vodafone Idea Limited, from Idea Cellular Limited.

Both Vodafone and Idea are selling their tower businesses to ATC Telecom Infrastructure: Vodafone sold theirs in April, for Rs 3850 crores, and Idea recently completed the sale of theirs to ATC Infrastructure for Rs 4000 crores. Both Vodafone India and Idea as customers, and ATC as a vendor, have agreed to treat each other as long-term preferred partners, subject to existing arrangements.

The Idea–Vodafone merger

Leadership team:

  • Kumar Mangalam Birla, the Chairman of Idea’s parent company Adita Birla Group, will be the non-executive chairman of the board of the merged company.
  • Balesh Sharma, who is currently the chief operating officer of Vodafone India, will be the CEO of the new entity.
  • Both the companies have 3 director appointment rights each.

Shareholding, post merger

  • Vodafone will receive a 50% stake in Vodafone-Idea (approximately 3,630 million shares. 4.9% stake in the combined company to Aditya Birla Group for $579 million in cash.
  • Vodafone will hold 45.1% ownership of the merged entity
  • Idea’s parent Aditya Birla Group will have 26.0% share.
  • Idea’s minority shareholders will hold another 28.9% ownership in the new company.
  • The balance stake will be held by the public.

Numbers, post merger

Based on data from March 2018

  • The combined entity will have 37% of total mobile connections, at 433,907,360 connections, which is around 37% of the market. Airtel has 324,937,687 active connections, and Jio has 159,975,910 connections. These 3 large entities (Airtel, Idea–Voda and Jio) will hold 78% of the total market.
  • The combined entity will have 42% of the total mobile connections, at 417371165. Airtel has 304,191,806 connections. Jio has 186,560,828 connections. These 3 large entities (Airtel, Idea–Voda and Jio) will hold 90% of the active users market.

Important to note that there are 3G interconnection roaming agreements between Airtel, Idea and Vodafone, so the active connections count data may have some connections counted more than once, and is thus only an indicative number.

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