Idea and Vodafone have finally announced their merger after several talks and plans that happened in the recent times. Vodafone India Ltd and its wholly owned subsidiary Vodafone Mobile Services Limited will now be merged with Idea Cellular. However, it will not include Vodafone’s investment in Indus Towers, its international network assets, and IT platforms. Post the merger, the promoters at idea will hold 26% of share, while Vodafone will have 45.1% and the balance shares will be held by the public. The deal will be completed in as long as two years. The transaction has a fee of $500 million “that would be payable under certain circumstances”.
Vodafone is valued at $12.4 billion, and Idea at $10.8 billion. Vodafone is valued at 6.4x EV/LTM EBITDA, and Idea at 6.3x EV/LTM EBITDA. With combined projected net value at Rs 670 billion ($10 billion) after taking integration costs and spectrum liberalization payments. The combined turnover of Rs 814.03 billion with Vodafone companies turnover of Rs 454.03 billion (55.8% of total), while Idea has a turnover of Rs 360 billion (44.8% of total). Vodafone has complete connections of 205 Million and Idea has 192 Million with combined Total connections of 397 million.
The Idea has 48.58 million Mobile Internet connections (2G+3G+4G), while Vodafone has 65 million making the combined entity of 113.5 million connections. As per the latest available financial results, the Mobile Broadband users combined is around 62.02 million mobile broadband (3G+4G) subscribers of which Idea accounts to 27.02 million of these, and Vodafone for 35 million. Moving to Towers category, Idea will contribute its standalone towers (15.4k) and its 11.15% stake in Indus Towers, while Vodafone will contribute its independent towers (15.8 k), but won’ contribute its stake in Indus Towers.
After the merger, Idea promoters will appoint Kumar Mangalam Birla as Chairman of the combined company. While the CEO and COO of the joint entity will need to be approved by both Idea and Vodafone. The CFO will be appointed by Vodafone. Promoters of both Idea and Vodafone can nominate three directors each as the Board will include six Independent Directors. Idea will be contributing $7.9 billion, and Vodafone India contribution will be $8.2 billion to the combined entity.