Idea-Vodafone Merger Creates India’s Biggest Telecom Company with 395 mn Customers and around Rs 80K cr revenue

 

The merged entity is now the market leader in terms of wireless subscribers. Earlier, Vodafone and Idea were in the second and third spot respectively, while Bharti Airtel was number one.
New Delhi: The board of Idea Cellular today approved the merger with Vodafone India Ltd and its wholly-owned arm Vodafone Mobile Services, making the new entity the biggest telecom operator in India.
The combined entity emerges as the market leader in terms of wireless subscribers, taking on rivals such as Airtel and Reliance Jio.
 The merged entity will be the largest telecom company in India with 395 million customers and Rs 80,000 crore in revenue, according to moneycontrol.com.
The merger is also expected to improve the combined EBITDA margin by 250-350 basis points due to cost savings - mainly on network and marketing expenses, says Fitch Ratings.

"The combined entity will also have a more balanced subscriber mix, as Vodafone is strong in urban areas whereas Idea focuses more on the rural mass market," the report said.
With 205 million Vodafone users and 190 million Idea, Cellular users this new entity will have a subscriber base close to around 395 million.

Mergers and Acquisitions in the Indian telecom sector have gained pace due to the entry of Reliance Jio’s 4g services. Reliance's investment of $25 billion and an offer of free voice and data service for six months has disrupted the pricing structure in the telecom sector. It also accelerated the pace of industry consolidation and led to the exit of many small players.
The combined market share of 43 percent -- Vodafone 23 percent and Idea 19 percent -- is going to be 10 percent higher than the closest competitor Bharti Airtel. In addition, their base share will exceed the limit of 50 percent in at least nine circles.

Apart from the Vodafone-Idea merger, Bharti Airtel recently acquired Telenor and Reliance Communication joined forces with Aircel and is now in talks with Tata Teleservices as well.
Vodafone will own 45.1% of the new company after transferring a stake of 4.9% to the promoters of Idea and their affiliates for Rs Rs 38.74 crore in cash. The promoters of Idea will hold 26% of the company and the balance will be held by the public, according to a notification sent to the stock exchanges.
The merger is expected to be completed this year.