Market Insight

Vodafone India and Idea Cellular agree merger terms

March 20, 2017  | Subscribers Only

Seth Wallis-Jones Seth Wallis-Jones Principal Research Analyst, Service Providers & Platforms
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Discussions between Vodafone and Idea Cellular have concluded with a deal agreed to merge the two businesses. While Vodafone will take a greater stake in the combined business, mechanisms are in place to equalise shareholdings over the next four to nine years.

  • Vodafone India was independently valued at INR828 billion ($12.4 billion) while Idea was valued at INR722 billion ($10.8 billion).
  • The deal does not include holdings in Indus Towers for which Idea intends to sell off its 11.5% stake, while Vodafone will explore options for its 42% stake in Indus Towers. Both companies also intend to sell their standalone towers which include 15,400 tenancies for Idea and 15,800 tenancies for Vodafone.
  • Vodafone will own 45.1% of the combined business, transferring a stake of 4.9% to Ideas parent company the Aditya Birla Group for INR39 billion in cash. Aditya Birla will then own a 26.0% stake.  Ideas other shareholders will own the remaining 28.9% of the business.
  • The business will be immediately deconsolidated from Vodafone and operated as a joint venture with Vodafone’s additional shareholding under restricted rights with votes exercised jointly.  Aditya Birla has the right to acquire an additional 9.5% stake in the business over four years. If ownership is not equalised by that point, Vodafone will reduce its own stake to match that of Aditya Birla. 

Geography
Asia Asia Pacific India
Research by Market
Mobile & Telecom
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