1. British telecom Vodafone and Aditya Birla Group company Idea Cellular announced the merger of their operations, creating the largest mobile operator by customer (38.6 percent) and revenue (40.1 percent). The joint entity will have about 430 million subscribers. The debt of merged entity will be Rs 1,25,000 crore. The Revenue of merged entity will be Rs 63,000 crore. The Average Revenue per user (ARPU) of merged entity is between Rs 100 to Rs 102 (These figures are as on 30th June 2018) .
2. The merged entity "Vodafone Idea Limited" will be headed by Kumar Mangalam Birla as chairman and Vodafone will have its nominee as the Chief Financial Officer (CFO), its Vittorio Colao.
3. The all share merger for both partners excludes Vodafone's 42 percent stake in Indus Towers Limited and will be effected through issuing new shares in Idea to Vodafone and result in Vodafone deconsolidating Vodafone India.
4. Vodafone will own 45.9 percent in the new company after transferring 4.9 percent to Aditya Birla Group for Rs 3,874 crore in cash. Idea will hold 26 percent of the new company while the rest will be hold by public shareholders. Idea and Vodafone said the merged entity will be jointly controlled by Vodafone and the Aditya Birla Group as per shareholder's agreement.
5. With 222 million customers, Vodafone enjoys market share of 26.40 percent. Idea has 25.04 percent with 211 million customers in wireless subscriber base as on March 2018 according to TRAI data.
6. Aggressive entry of Reliance Jio has launched a big price war. With its free services, Jio has upset the big players. The Vodafone Idea will only add fuel to the fire. Since the merged entity will have more resources, the telecom price war is going to be messier.
7. Though the consolidated entities would fight for price war for a year or two, prices are going to be increased in long term. With fewer players in the telecom industry, there is higher chances of consensus on prices.
8. Overall consolidation in the debt ridden telecom industry will lead to better financial health and sustainability of companies. Since the consolidation will leave only 3 players in telecom industry, there will be less competition and bigger revenues.
9. The transaction is subject to necessary approval from SEBI, Department of Telecom, RBI etc. "Upon amalgamation becoming effective, the entire business of Vodafone India Limited and Vodafone Mobile Services Limited, excluding Vodafone India Limited's investment in Indus Towers Limited, its international network assets and information technology platforms, will vest in the company.
10. Vodafone India has 17 circles with 4G capability, covering 90 percent of the company's total revenues and 94 percent of mobile data revenues. Also it has the largest voice and data traffic usage within the Vodafone Group. Idea is trying to attract premium 4G customers, having launched services in seven circles so far. Idea's wireless broadband network is spread across 17 circles with a population of over 880 million, with 50 percent of this population already covered.
11. The two companies agreed to merge their companies with a swap ratio of 1:1. This means every Idea share you hold will be exchanged with a new share in the merged entity. However, independent valuation of the two businesses suggests Vodafone's business is worth more. The assessment suggests that Vodafone's India business is worth Rs 82,800 crore, while Idea's business is valued at Rs 72,200 crore.
12. Vodafone India (Rs 3926.34 crore in cash) and Idea Cellular (Rs 3322.44 crore by way of Bank Guarantee) have paid the Department of Telecommunications (DOT) Rs 7,268 crore that was sought as a key condition for approving their merger, thereby clearing the final obstacle in the largest merger in the sector which will create India's biggest telecom operator.
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