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Inching closer to the formation of the country's largest telecommunications operator, Idea Cellular and Vodafone made a joint payment of Rs 7,248.78 crore under protest to the telecommunications department for merging their mobile business. Informed persons stated that the payment had been made "under protest" and that the new combined entity had the possibility of later challenging the rights requested in court
"Idea Cellular and Vodafone made a payment under protest such As requested by the court.DOT for the merger Rs 3,926.34 crore were paid in cash and a bank guarantee of Rs 3,322.44 crore were provided, "an official of Idea Cellular confirmed the development.
The Telecom Department gave On July 9, the combined companies of Idea and Vodafone – called Vodafone Idea – will create the country's largest telecommunications operator, D & # 39; 39, worth more than $ 23 million. billion (or more Rs 1.5 lakh crore), with a market share of 37.5% and a subscriber base of about 438 million (39% of customer share).
While Idea Kumar Mangalam Birla gave a bank guarantee on account of non-recurring spectrum fees, Vodafone India, headquartered in the United Kingdom, paid sums of money to unlisted companies auction, owned by the second largest operator of India
. Idea and Vodafone, fierce competition in the market where margins have bottomed out with free voice calls.
It will have the ability to provide 4G spectrum in all telecommunication circles of the country. According to a presentation by Idea, the combined 4G spectrum of both companies is capable of offering up to 450 megabits per second of broadband throughput on mobile phones in 12 Indian markets.
With the new entity in force, Bharti Airtel will lose the label of India's largest telecommunications service provider to the new entity. With the new entity in place, the telecom race will be a three-way race, with the latest Reliance Jio disruptor at the bronze position. But the increase to 20% of Jio's market share lasted only 18 months.
Recently, Bharti Airtel's (India) CEO, Gopal Vittal, said the telecom sector should have only three major players. share. If this theory is true, Vodafone Idea could lose market share because Airtel and Jio should continue to put pressure on margins. The combined debt of the two companies – Idea and Vodafone India – is estimated at around Rs 1.15 lakh crore.
Vodafone will hold a 45.1 stake in the combined entity, while Aditya Birla Group headed by Kumar Mangalam Birla would have 26% and Idea shareholders 28.9%
The Aditya Birla Group has the right to acquire up to 9.5% additional Vodafone under an agreed upon mechanism to equalize holdings over time.
If Vodafone and Aditya Birla The Group's interests in the combined company are not equal after four years, Vodafone will sell shares of the merged company to equalize its participation with that of the Aditya Birla group during the reporting period. next five years.
the voting rights of the additional shares held by Vodafone will be restricted and the votes will be exercised jointly in accordance with the terms of the shareholders' agreement.
Earlier this year, the companies had announced a restructuring of the management team for the merged company that would have Kumar Mangalam Birla at the helm as non-executive chairman. Balesh Sharma, CEO of the merged entity, will be the insider of Vodafone and the current Chief Operating Officer (India).
According to badysts, any additional delay could have been costly for heavily indebted companies. Recently, the Vodafone and Idea teams had a brainstorming session together – the first of its kind before the merger – which also seems to indicate the haste that companies seem to have to move the merger forward.
The companies hoped to complete the merger at the end of June, but the process has already been delayed by one month due to conditional DoT approval.
The process is now that the DoT will issue its final approval letter and will transfer the licenses of Vodafone India Cell Idea. The DoT will also begin to transfer Vodafone's bank guarantees to Idea for deferred spectrum payments.
The path of fusion has now taken well over a year. It is in March 2017 that Vodafone India and Idea Cellular have announced the merger. CCI gave the go-ahead to the companies to join their activities in July 2017. A month later, SEBI and the stock exchanges gave the badent to the union. NCLT, earlier this year in January, approved the merger.
Someone remembers the phrase "Does anyone here should know why this couple should not be united in holy marriage, speak now or forever"? Well, DoT raised its hand earlier in July and asked for 72 billion rupees at the last hurdle. And it seems now that the last hurdle has been crossed.
The stock market has also given its blessings, it seems.
Idea Cellular jumped nearly 16% to reach a higher intraday of 61.3 rupees. Prashant Singhal, EY's leader in telecommunications, media and technology for emerging markets, said: "It's the right thing to do under the current circumstances – since each delay. Finally, India is a 3 + 1 operator market on a market of almost nine operators 24-30 months ago. "
Sanjiv Bhasin, Executive Vice President, Markets and Corporate Affairs at the IIFL" Payments now will ensure that the merger will unfold.It will have its own economies of scale, it will have a lot of tax benefits, claim a lot more depreciation, so that the positive accounting points will come. Idea) The stock was trading at its historic low of 50 rupees, which will be a blow in the short-term arm. "
Commenting on the tripartite race that the telecoms sector will now be, Bhasin added," Now it will be a three-steal attack ts with Jio, Airtel, and Idea-Voda, where all three are able to raise money. So, overall, the worst may be over and over time as prices stabilize, you can see Idea-Vodafone also report better average revenue per user (ARPU) and profitability in the next three to six quarters. There is enough room for all three to survive. At 350 rupees for Bharti Airtel and 50 rupees for Idea, all the negatives were taken into account. "
What will be the next shots of Bharti Airtel and Reliance Jio? Whatever they may be, it will certainly be an interesting show Jio is not content to be a bronze medalist, the coming months in the Telecoms Wars will certainly be intriguing, and that runs the longest, and makes the longest distance call with an (almost) equal chance.
Industries Ltd. is the sole beneficiary of the Independent Media Trust that controls Network18 Media & Investments Ltd.
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