Vodafone and Idea merge in Fat Big Telco in India

Vodafone and Idea merge in Fat Big Telco in India

Foto: Fotolia

Vodafone's Indian unit agreed to merge with Idea Cellular to create a wireless company that’s more than twice as big as AT&T by subscribers, and a new leader in a market that’s so competitive after India’s richest man offered phone calls for free, according to Bloomberg.

Vodafone will own 45.1 percent of the combined company, after selling a 4.9 percent stake in the new entity to billionaire Kumar Mangalam Birla’s holding companies, according to a stock exchange filing. Birla’s companies will take a 26 percent holding, with the remainder being held by the public. The new company is worth $23.2 billion, based on the enterprise value of $12.4 billion for Vodafone India and $10.8 billion for Idea Cellular.

The enlarged wireless operator would have 395 million subscribers, exceeding those of market leader Bharti Airtel. Vodafone would gain a listing in the world’s second-largest wireless market, which it has been considering since at least 2011. Vodafone and Idea will each control three seats on the board of the new company, which in addition will have six independent directors. Birla will have the right to appoint a chairman.

For Vodafone, the deal would allow it to unload an unprofitable business that has forced the U.K. carrier to take a $5 billion writedown and pump more than $7 billion into the unit. Idea’s promoters will buy the 4.9 percent stake in the merged entity for 38.74 billion rupees ($592 million) in cash, on completion of the transaction.

The latest transaction is expected to be completed in 2018, according to the statement. It’s the biggest deal to emerge after billionaire Mukesh Ambani’s Reliance Jio Infocomm stormed into the market last year by offering free calls and data, pressuring other carriers to consolidate.

Birla units, including Aditya Birla Nuvo, own 42 percent of Idea, according to the company’s website. Malaysian carrier Axiata Group Bhd has a 20 percent stake. Vodafone India Ltd. is a wholly owned unit of Vodafone. In the quarter ended Dec. 31, Idea reported its first loss for the group in about a decade. Idea reduced its voice calling rates by 11 percent and mobile data rates by 15 percent from the previous quarter. Free calls and data offered by Reliance Jio also reduced data consumers on its network.

More from category

Verizon Selects Samsung for 5G Commercial Launch

Verizon Selects Samsung for 5G Commercial Launch

12 Jan 2018 comment

Samsung announced that it has been selected to supply Verizon with commercial 5G Fixed Wireless Access (FWA) network solutions. The two companies will begin by launching commercial 5G services in Sacramento, California in the second half of 2018.

Ericsson Signs Funding Agreements for 5G Research

Ericsson Signs Funding Agreements for 5G Research

2 Jan 2018 comment

Ericsson has signed agreements for credit facilities with the Nordic Investment Bank (NIB) for USD 220 million, maturing in 2023, and AB Svensk Exportkredit (SEK) for USD 150 million, maturing in 2025.

Huawei and NTT DOCOMO Achieve a New Breakthrough in 5G

Huawei and NTT DOCOMO Achieve a New Breakthrough in 5G

27 Dec 2017 comment

Huawei and NTT DOCOMO have completed a successful joint field trial for 5G mobile communications over a long distance with 39 GHz Millimeter Wave (mmWave) band in Yokohama, one of largest commercial areas in Japan.