Creating the largest telecom company in India, Idea Cellular and Vodafone have merged their operations and have officially become operational as a single entity under the name ‘Vodafone Idea Limited’.
After National Company Law Tribunal (NCLT) cleared the merger on Friday, Vodafone Idea topples Bharti Airtel as the largest telecom service provider in India with a subscriber base of over 408 million. Idea Cellular’s MD Himanshu Kapania has stepped down and will continue as a non-executive director of the merged entity.
Vodafone Group Plc owns a 45.2% stake and Aditya Birla Group owns a 26.0% stake in the new entity. A new board has been put in place with Kumar Mangalam Birla as the Chairman and 12 Directors. Balesh Sharma, who was earlier COO of Vodafone India has been appointed as the CEO of the merged entity.
Impact on customers
As far as the consumer is concerned, nothing will change as the Vodafone and Idea brands will continue to run independently. The current plans for both the telecom companies will continue.
However, given the larger spectrum footprint that the merged entity will now have, the company may combine services in the future and launch combined plans. But for now, nothing changes for both Idea and Vodafone customers.
“We will continue to offer a wide variety of digital services and solutions under both of our popular and loved brands (Vodafone and Idea). Services - including Voice, Data, Mobile payments, IoT, advanced enterprise offerings and entertainment,” the company said in a statement.
Footprint of the merged entity
Vodafone Idea will have a pan-India revenue market share of 32.2% and will be the biggest in nine circles. The merger gives the company a growing broadband network (3G+4G) with over 3,40,000 broadband sites covering 840 million Indians.
It will become the largest voice network in the country with over 2,00,000 unique GSM sites covering over 1.2 billion Indians (92% population coverage).
The merged entity will have a spectrum portfolio of around 1850 MHz and an adequate number of broadband carriers.
The merger also increases its distribution reach to over 1.7 million retailers and nearly 15,000 branded stores.
Are services expected to improve?
The merged entity will have a spectrum portfolio of ~1850 MHz, over 200,000 unique GSM sites and ~235,000 kms of fibre and an adequate number of broadband carriers, which it claims will provide superior consumer experience across 2G, 3G and 4G platforms.
This covers 92% of the population and reaches nearly 5,00,000 towns and villages.
“This extensive infrastructure will allow customers to remain confidently connected across the country and enjoy uninterrupted services even as it integrates and optimizes its network in a phased manner across circles,” the company says.
Vodafone Idea will also offer a variety of digital services and solutions including mobile payments, Internet of Things (IoT), advanced enterprise offerings and entertainment.
The equity infusion of Rs. 67.5 billion in Idea and Rs. 86 billion in Vodafone, coupled with monetisation of standalone towers of both companies for an enterprise value of Rs. 78.5 billion, will give the company a cash balance of over Rs. 193 billion. This is after paying Rs. 39 billion to the Telecom Department.