Vodafone, Idea are planning to seek a merger pact with a revenue of Rs.77,500 to Rs80,000 crore, in a month.
Vodafone, Idea are likely to finalize within a month the merger deal that will create India’s biggest telecom firm, according to sources.The companies are almost agreed to sign the agreement and it will not take more than a month to announce it. Idea and Vodafone are likely to announce a decisive signing agreement by 24th February-25th February says some source.
However, both Vodafone and Aditya Birla group firm Idea Cellular deteriorated to comment on the matter. The British telecom major has brought its ex-India unit chief Marten Pieters to work on the proposed merger.
If the agreement is successful, then both companies will create India’s biggest telecom firm with a revenue share of around 40 per cent and a subscriber base of over 380 million, according to India Ratings and Research
The Chief Executive of Vodafone Group Vittorio Colao is also likely to brief all business heads of the Indian arm on a conference call next week about the proposed merger. The merger of Idea and Vodafone India will create entity with revenue of Rs 77,500 to 80,000 crore in addition to the elimination infrastructure capex and duplication of spectrum, some of the the rating agency said in its report.
Further, the spectrum of Idea in two circles and Vodafone India in seven whose authorizations are expiring in 2021-2022 are valued at an amount of Rs 12,000 crore as per latest auction price. These authorizations are not in common circles, and there could be other potential spectrum capex synergies between the two companies, according to the reports.
According to the merger and acquisition rules, an entity should not hold more than 25 per cent spectrum allocated in a telecom circle and 50 per cent on spectrum allocated in a particular band in a service area. The merger entity should also not have more than 50 per cent revenue and subscriber market share .The present spectrum holding, revenue and subscriber base, both the companies need to work on synergy to comply with rules.
According to CLSA report, the merged entity would breach revenue market share, subscriber and spectrum caps in five markets. It also estimated that the excess spectrum which would need to be submitted or sold off is valued around Rs 5,400 crore and for the merger both the companies will also have to shell out Rs 5,700 crore for liberalising radiowaves which were allocated administratively. According to CLSA report both companies entity as per present scenario will breach spectrum cap in2500 Mhz band in Maharashtra and Gujarat and 900 Mhz band in Maharashtra, Gujarat, Kerala, Haryana and UP West and in 2500 Mhz band.