Vodafone confirms merger talks with rival Idea Cellular
Vodafone said on Monday that it is in talks with Aditya Birla Group to merge its Indian operations with rival Idea Cellular in an all-share deal that could help the groups counter the brutal price war in the market, after the entry of Reliance Jio.
In a statement, Vodafone said that any merger would involve Idea issuing new shares to Vodafone and would result in Vodafone deconsolidating Vodafone India. There is no certainty that any transaction will be agreed, nor as to the terms or timing of any transaction.
The merger will create India’s largest telecom company in terms of revenues as well as subscribers. The revenue will be of over Rs. 80,000 crore, while the combined subscribers of Vodafone and Idea will reach 375 million, well ahead of Bharti Airtel which has around 260 million subscribers.
Vodafone took a $5 billion writedown on Vodafone India last year due to the new bout of intense competition from Reliance Jio who recently introduced the “Happy New Year” offer extending its free data, voice and apps till 31st March, 2017.
After the merger news, shares in Vodafone were up 3 percent at 199 pence by 0943 GMT, while Idea Cellular was up 25 percent and Bharti Airtel was up 6.7 percent.
