Proposed merger of Vodafone and Idea Cellular operations would result in nearly 400 million combined customers, robust spectrum for LTE and 5G.
Vodafone Group and Idea Cellular moved on long-simmering plans to combine their cellular operations in India, announcing a proposed deal to create the countries largest mobile operator. Should the deal be approved, the combined entity will have nearly 400 million customers and approximately 35% market share.
The proposed deal calls for Vodafone to contribute its Vodafone India operations, including its standalone towers, but excluding its 42% stake in Indus Towers, with an overall value of $12.4 billion. Idea is set to include all of its assets including its standalone towers and its 11.15% stake in Indus Towers, with a total value of $10.8 billion excluding the Indus stake.
Vodafone said it would transfer a 4.9% stake in the combined entity to Aditya Birla Group, leaving Vodafone with a 45.1% stake in the operations. Idea would come away with a 28.9% ownership stake, with the Aditya Birla Group owning 26% of the operations, though with the right to acquire up to an additional 9.5% of the operation from Vodafone.
Should the deal garner approvals, Vodafone and Idea said prior to close they plan to sell their standalone tower assets and Idea to sell its stake in Indus Towers in a move to reduce the combined entity’s debt leverage. Vodafone added it would also explore strategic options for its Indus Towers stake.
The companies noted branding for the new entity would be decided at a later time, “and will leverage customers’ affinity for both existing brands, built up over the past decade.”
In touting the proposed merger, the companies cited the reach of their current networks and spectrum depth to “accelerate the pan-India expansion of wireless
broadband services on 4G/4G+/5G technologies to build capacity, supporting the expansion of digital content and [internet of things] services and delivering a world-class broadband experience to customers.” The combined operations would hold a claimed 1,850 megahertz of total spectrum across the country.
“The combination of Vodafone India and Idea will create a new champion of Digital India founded with a long-term commitment and vision to bring world-class 4G networks to villages, towns and cities across India,” explained Vodafone CEO Vittorio Colao, in a statement. “The combined company will have the scale required to ensure sustainable consumer choice in a competitive market and to expand new technologies – such as mobile money services – that have the potential to transform daily life for every Indian. We look forward to working with the Aditya Birla Group to create value for all stakeholders.”
The Indian mobile market is currently dominated Bharti Airtel with more than 260 million subscribers.
Reports last month suggested the two companies were on the verge of announcing a merger, with local press noting the combined entity would likely have to divest assets, including spectrum, in order to comply with local regulations, which stipulates a single operator can’t have more than a 50% share of subscribers and revenue in a determined telecom service area.
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