The Competition Commission of India (CCI) has approved the proposed merger of Vodafone India and Idea Cellular, creating India's largest mobile operator. Vodafone India and Idea are currently the second and third largest operators on the local market, respectively. The merged entity will have a combined base of nearly 400 million customers and 41 percent revenue market share.
Under the plan submitted to Indian regulators, Vodafone will initially hold a 50 percent stake in the combined entity, while the Aditya Birla Group and public shareholders will hold 21.1 percent and 28.9 percent, respectively. Idea Cellular is an Aditya Birla Group Company. Vodafone will then divest a 4.9 percent stake to Aditya Birla, which would increase Aditya Birla’s stake from 21.1 percent to 26 percent, thus crossing the threshold for an open offer.
Under the agreement, Vodafone will subsequently own 45.1 percent of the combined company after transferring a 4.9 percent stake to the Aditya Birla Group for INR 39 billion in cash, concurrent with the completion of the merger.
The new combined entity will remain listed and be renamed at a later stage. The promoters of Idea and Vodafone would have the right to nominate three members each on the board, which will have 12 directors, six of whom will be independent.
Vodafone and Aditya Birla Group welcomed the decision of the Competition Commission of India and said they expected other statutory approvals to follow in order to complete the transaction in 2018. The two companies also said they "remain fully committed to fulfilling the Digital India vision" of the local government and will connect villages, towns and cities across India with 4G/4G+ networks.
