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Idea, Vodafone India announcer merger, now biggest entity in telecom industry
20 March 2017, 07:04 | Jodi Jackson
Any merger would be effected through the issue of new shares in Idea to Vodafone and would result in Vodafone de-consolidating Vodafone India
Vodafone India has the largest voice and data traffic usage within the Vodafone Group and has more than 200 million customers. Idea Cellular has a net worth of Rs 24,296 crore and turnover of Rs 36,000 crore.
The combined market share of both the telecos add up to 43%, making it the largest telecom firm, surpassing Bharti Airtel.
Shares in Idea rose nearly four percent in Mumbai following announcement of the Vodafone deal.
Vodafone will hold 45 per cent stakes in the new company.
- Mobile Internet connections (2G+3G+4G): Idea has 48.58 million, while Vodafone has 65 milllion, giving the combine entity a grand total of 113.5 million connections.
- Idea's promoters would have the sold right to appoint the Chairman while the appointment of the CEO and the COO will need a nod from the promoters of both the companies.
In the merged entity, Vodafone will own 45.1% of the company, transferring a stake of approximately 4.9% to the promoters of Idea and/ or their affiliates for Rs 38.74 billion in cash.
Vodafone has 202.79 million users and Idea Cellular 187.68 million in India. According to a statement released, promoters of Idea and Vodafone will have the right to nominate three directors each. Idea will have its nominee as chairman while CFO will be from Vodafone's nominee. Aditya Birla group will then own 26% stake in the company but it will have the right to acquire more shares from Vodafone under an agreed mechanism with a view to equalize the shareholding over time. Immediately thereafter, and on the amalgamation of Vodafone India Limited, these shares will stand canceled, and Idea will then issue shares equal to 50% of post-issue paid up capital to Vodafone.
In a BSE filing Idea said, "The board of directors at its meeting held on March 20, 2017, have approved the scheme of amalgamation of Vodafone India Limited (VIL) and its wholly owned subsidiary Vodafone Mobile Services Limited (VMIL) with the company subject to necessary approvals". Until then, the additional shares held by Vodafone will be restricted, and votes will be exercised jointly under the terms of the Shareholder agreement.