Vodafone Group announced that it has completed the merger between Vodafone India and Idea Cellular, and that the new company – which is now India’s largest operator – will be renamed Vodafone Idea.
The new operator is jointly controlled by Vodafone and the Aditya Birla Group. Kumar Mangalam Birla will serve as chairman of the board, while Vodafone India COO Balesh Sharma has been appointed CEO by the board.
The combined entity surpasses Bharti Airtel as the largest telco in India with close to 408 million customers.
During the twelve months to 30 June 2018, Vodafone India and Idea generated revenue of €7.1 billion and EBITDA of €1.4 billion. The newly combined operation is expected to generate €1.7 billion run-rate cost and capex synergies, equivalent to a net present value of approximately €8.5 billion.
As at 30 June 2018, the combined cash balance of Vodafone Idea was €2.3 billion and its net debt was €13.2 billion, both after adjustments for the €500 million payment of spectrum liberalization cost made to the DoT and €1 billion of equity funding contributed by Vodafone Group, in accordance with the terms of the merger agreement.
Vodafone Idea will have the option to monetize Idea’s 11.15% stake in Indus Towers upon completion of the merger of Bharti Infratel and Indus Towers, expected before the end of the financial year ending 31 March 2019. Based on the terms of the Bharti Infratel and Indus merger agreement, this would currently equate to a cash consideration of €600 million.
Separately, Aditya Birla Group is completing the purchase of a 4.8% stake in Vodafone Idea from Vodafone Group for a total consideration of €300 million, in accordance with the maximum price payable under the SEBI pricing guidelines. After taking these proceeds into account, this implies a net capital injection by Vodafone Group of €700 million.
Following completion of everything, Vodafone will own a 45.2% stake in Vodafone Idea and Aditya Birla Group will own a 26% stake, both on a fully diluted basis. Vodafone will also separately hold a 29.4% stake in the combined entity resulting from the merger between Bharti Infratel and Indus Towers.