Vodafone India and the Kumar Mangalam Birla-owned Idea Cellular would merge to create the country’s biggest phone company by subscribers, giving a tough fight to Bharti Airtel. The fresh Rs 1.55 lakh crore entity will also be the world No. 2 after China Mobile.
Under the merger, both the company will hold equal stakes over a period of time. Thus, the agreement will see Aditya Birla Group, the promoters of Idea, gradually raising its stake in the joint entity while Vodafone Group will decrease its own.
Initially, the AB Group will get hold of 4.9 per cent from Vodafone for Rs 3,874 crore, or Rs 108 a share, to take its stake to 26 per cent. The Vodafone will hold 45.1 per cent. Moreover, the company will have the right to buy another 9.5 per cent (at Rs 130 a share or the prevailing mark price.
Notably, Kumar Mangalam Birla will be the chairman of the new venture, while Vodafone will name the chief financial officer. The two companies will together name the CEO and operations head before the closure of merger. The deal is expected to be accomplished within 24 months.
The new entity will remain listed though it will be renamed at a later stage. Both the companies will have the right to nominate three members each on the board. The board will have 12 directors; of whom will be independent.
“This landmark combination will enable the Aditya Birla Group to create a high-quality digital infrastructure that will transition the Indian population towards a digital lifestyle and make the government’s Digital India vision a reality,” Aditya Birla Group chairman Kumar Mangalam Birla said in the statement.
