Vodafone-Idea merger biggest telecom company in India

UK-based Vodafone is merging with India telecom Idea Cellular, creating India’s biggest telecom company, by revenue and 400 million subscribers replacing Bharti Airtel, and will have 43% revenue share in the market by 2019 against 33% held by Airtel and 13 per cent by Reliance Jio.

It was Jio, owned by India’s richest man Mukesh Ambani’s, aggressive marketing tactics, including the offer to provide its mobile broad services free of charge for three months, later extending to six months,  had forced Vodafone India  to write down  the value of their Indian business by €6.3bn, citing  the transformed competitive market sector, and merged with Idea Cellular, together with current market leader Bharti Airtel, to cut prices, significantly impacting their profitability.Shares of Idea rose 4 per cent in Mumbai Stock Exchange following the announcement of the deal. Over 10 telecom operators are trying to attract India’s one billion mobile phone users,

Jio still boasts  81m subscribers  and its flagship plan including  a year’s unlimited voice and data services for Rs 303  per month £3.64 plus Rs 99 £1.19 joining fee is still far more attravtive than rival offerings.

Vodafone to own 45.1 per cent of the merged entity after it transfers 4.9 per cent to the promoter of Idea for £480m ( $ 592.15m,  Rs38.74 bn ) in cash. The combined group will be jointly controlled by both Vodafone and Aditya Birla Group,  after the deconsolidation of Vodafone India immediately.

Vodafone CEO Vittorio Colao will discuss the key issues related to the mergers. Kumar Mangalam Birla will be chairman of the merged company and Vodafone will appoint a CFO.