Vodafone-Idea merger Live: Kumar Birla sees 'great business sense' to deal
Track the latest developments from the Vodafone-Idea merger here.
13.45 pm: Meanwhile, CNBC-TV18 is exclusively speaking to AB Group Chairman Kumar Mangalam Birla and Vodafone Plc CEO Vittorio Colao.
Birla says that there is "great business logic" to the merger. Colao adds that it is the companies' "vision for the future" that has got them together rather than competition.
"We want to provide valuable service to every India -- be it in metros or rural areas. We want to be present in all areas, including transactions and financial inclusion," he says, adding that the coming together of the two entities will help them achieve their goals.
13:07 pm: The merger comes at a time when the finances of the telecom industry is fragile. As noted by Gopal Vittal, Bharti Airtel's Managing Director for India and South Asia at a public event last week, the financial health of the industry is at its weakest ever with a massive debt burden that exceeded Rs 4.5 lakh crore.
13:05 pm: A back of the envelope calculation by Moneycontrol Research estimates the per share value of the combined entity at Rs 109, based on the value of the 4.9 percent stake sale by Vodafone to Idea promoters.
13:01 pm: Idea said the combined entity will hold 1850 MHz of spectrum, sufficient to compete effectively with the other major operators in the country. Experts point out the industry's consolidation rules limit spectrum holding at 50 percent in each band individually, and the Idea-Vodafone combine could breach the spectrum cap in at least five circles in the 900 MHz band.
12:30 pm: More from the press conference underway — “For a company with such size there will be enough growth opportunities; I don't expect a significant downside,” Birla has said trying to downplay fears of job lay offs following the merger. Industry body COAI had earlier pointed out possibility of nearly 30 percent reduction in jobs over the next few years.
12:20 pm: While the merger will create the country’s largest telecom player, the combined entity may have to face a number of regulatory hurdles. Especially, on the subscriber share and spectrum caps front.
Brokerage CLSA had in the recent months said that the combined entity would hit revenue market share, subscriber market share and spectrum caps in at least five of the total 22 circles. The combined entity will get a year to align with revenue and subscriber market share caps, but it would have to part sell or surrender spectrum to stay below the cap.
12:15 pm Not so long ago, the telecom sector was the posterboy of India Inc and the generator of millions of white-collar jobs. Low levels of tele density meant a large opportunity for mobile service providers back in 1995, when the industry was opened up to the private sector. But with a subscriber base crossing one billion and the high-stakes data game forcing players to come together, the sector is expected to shed as many as one million jobs (direct and indirect put together). According to a GSMA report, India’s telecom sector directly employs 2.2 million people and 1.8 million indirectly. Consolidation in the sector could cause nearly a third of these jobs to be shed.
Read Malini Bhupta's report on the telecom sector consolidation and its impact on the jobs in the sector.
12:10 pm Vodafone Plc CEO Vittorio Colao says unlimited voice is the new norm. Birlas and Vodafone have been biggest investors in Digital India for the past 10 years, he says.
12:00 pm Kumar Mangalam Birla says the combined entity will have a customer base of 400 million users and will account for subscriber market share worth 35%. The Aditya Birla Group Chairman is extremely confident that merger will make the government's Digital India vision a reality.
11: 57 am: Let's take a look at a few contours of the deal. Vodafone will own 45.1 percent of the combined company after transferring a stake of 4.9 percent to the promoters of Idea crore for Rs 3,874 crore in cash concurrent with the completion of the amalgamation. The promoters of Idea will hold 26 percent of the Company and the balance will be held by the public.
The promoters have the right to acquire up to 9.5 percent additional stake at Rs 130/share from Vodafone under an agreed mechanism with a view to equalizing the shareholding overtime.
11:50 am Idea Cellular on Monday announced that its board has approved the merger of Vodafone India and its wholly-owned subsidiary Vodafone Mobile Services Limited with itself, in the process creating the country's largest telecom entity.11:45 am Hello and welcome. Moneycontrol brings you the latest development from the biggest news of the day — the mega-merger of telecom majors Idea Cellular and Vodafone India.