Idea-Vodafone merger: Key highlights of the deal

> Vodafone to combine its subsidiary Vodafone India (excluding its 42 percent stake in Indus Towers) with Idea, which is listed on Indian Stock Exchanges.

> Highly complementary combination will create India’s largest telecoms operator with the country’s widest mobile network and a strong commitment to deliver the Indian government’s ‘Digital India’ vision.

> Sustained investment by the combined entity will accelerate the pan-India expansion of wireless broadband services using 4G/4G+/5G technologies, support the introduction of digital content and ‘Internet of Things’(IoT) services as well as expand financial inclusion through mobile money services for the benefit of Indian consumers, businesses and society as a whole.

> Merger of equals with joint control of the combined company between Vodafone and the Aditya Birla Group, governed by a shareholders’’ agreement.

> The merger ratio is consistent with recommendations from the joint independent valuers. The implied enterprise value is Rs 828 billion (USD 12.4 billion) for Vodafine India and Rs 722 billion (USD 10.8 billion) for Idea excluding its stake in Indus Towers, valuing Vodafone India at 6.4x EV/LTM EDBITDA and Idea excluding its stake in Indus Towers at 6.3x EV/LTM EBITDA.

Read more: Idea Cellular announces merger with Vodafone India

> Substantial cost and capex synergies with an estimated net present value of approximately Rs 670 billion (USD 10.0 billion) after integration costs and spectrum liberalisation payments, with estimated run-rate savings of Rs 140 billion (USD 2.1 billion) on an annual basis by the fourth full year post completion.

> Vodafone will own 45.1 percent of the combined company after transferring a stake of 4.9 percent to the Aditya Birla Group for circa Rs 39 billion (circa USD 579 million) in cash concurrent with the completion of the merger. The Aditya Birla Group will then own 26.0 percent and has the right to acquire more shares from Vodafone under an agreed mechanism with a view to equalising the shareholdings over time.

> If Vodafone and the Aditya Birla Group's shareholding in the combined company are not equal after four years, Vodafone will sell down shares in the combined company to equalise its shareholding to that of the Aditya Birla Group over the following five-year period.

> Until equalisation is achieved, the voting rights of the additional shares held by the Vodafone will be restricted and votes will be exercised jointly under the terms of the shareholders' agreement.

> Vodafone India will be deconsolidated by Vodafone on announcement and reported as a joint venture post-closing, reducing Vodafone Group net debt by approximately Rs 552 billion (USD 8.2 billion) and lowering Vodafone Group leverage by around 0.3x net debt/EBITDA. The transaction is expected to be accretive to Vodafone's cash flow from the first full year post-completion.

> The transaction is expected to close during calendar year 2018, subject to customary approvals.