Indian operator Idea Cellular has approved plans to raise up to INR 67.5 billion in the sale of new shares, in order to strengthen its capital position ahead of completing its planned merger with Vodafone India. The company will sell INR 32.5 billion in shares to its controlling shareholder the Aditya Birla Group at a small discount of INR 99.5 per share, and sell the remaining shares to institutional investors or through a rights issue. The plans mean ABG will receive a slightly higher stake in the merged group with Vodafone.
ABG will increase its ownership in Idea from 42 to 47 percent after the share issue. As a consequence, ABG and Vodafone have agreed that ABG will buy a minimum of 2.5 percent of the merged entity from Vodafone, or such higher stake required in order for ABG to ultimately own at least 26 percent of the new company. Vodafone will receive minimum proceeds of INR 19.6 billion (EUR 256 million) from the sale and Vodafone's ownership in the combined entity is expected to be 47.5 percent at completion. Any shares over 45.1 percent will not be subject to lock-up.
Vodafone and Idea expect to complete the merger in the first half of calendar 2018. The deal to create India's biggest mobile operator has already been approved by shareholders and creditors and the Competition Commission of India, but still needs clearance from the Department of Telecom and the National Company Law Tribunal.
