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The merger is expected to complete before the end of this month, according to sources close to the matter
India’s Department of Telecommunications (DoT) has cleared Idea Cellular to receive 100 per cent foreign direct investment (FDI), from its current limit of 67.5 per cent. The move paves the way for the proposed merger between Idea Cellular and Vodafone to be approved.
“The merger of Vodafone India with Idea Cellular is in the final leg of regulatory approvals and is expected to complete in the first half of calendar year 2018, subject to the final approval from the DoT,” Idea Cellular said in a statement.
The newly formed entity will be called Idea Vodafone, as the new company looks to leverage the significant brand power of its two constituent investors. Upon formation, Idea Vodafone will overtake Bharti Airtel and Reliance Jio to become the country’s largest telco, with 430 million subscribers.
Vodafone will own a 45.1 per cent stake in Idea Vodafone, with Idea Cellular (28.9 per cent) and Idea’s subsidiary Aditya Birla Group (26 per cent) holding the remaining shares.
Idea Vodafone will hope to leverage its incredible economy of scale to drive down costs and boost margins in one of the world’s most competitive telecoms markets.
Idea Vodafone will face ferocious competition from India’s current biggest telco, Bharti Airtel, and its market disrupting rival Reliance Jio, who are both offering ultra-cheap data tariffs to a new generation of Indian smartphone users.
