NewDelhi: To take on competition in the Indian telecom market, two telecom companies- Vodafone and Idea cellular merged on Friday to become the biggest telecom service provider with over 408 million subscribers.
A new board has been formed for the merged entity “Vodafone Idea Ltd’ with 12 directors including six independent directors and Kumar Mangalam Birla as its Chairman. The board has appointed Balesh Sharma as the CEO, the companies said in a joint statement.
The approval was made after the Department of Telecommunications (DoT) gave the final nod to the merger of Vodafone India with Idea Cellular, to create Vodafone Idea Limited on July.
However, some condition were made before the nod that the merged entity will have to comply with the outcomes of pending cases in the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) and other courts,” an official said.
The next step of the process will be all companies informing the Registrar of Companies of the changes, after which Vodafone India and VMSL will cease to exist, officials added.
The combination will have all India revenue market share of 32.2 per cent and take the numero uno slot in nine telecom circles. Apart, both Vodafone and Idea brands will continue.
The telecom giant will remove Bharti Airtel from its current pole position, and will have the firepower to compete with intensified Reliance Jio.
It will have a broadband network of 3.4 lakh sites and distribution network with 17 lakh retail outlets. “The merger is expected to generate Rs 14,000 crore annual synergy, including opex synergies of Rs 8,400 crore, equivalent to a net present value of approximately Rs 70,000 crore,” the statement said.
The net debt of the company stood at Rs 1,09,200 crore on June 30, 2018.
Moreover, it added, the company has an option to monetise over 11 per cent stake in Indus (the tower company), amounting to a cash consideration of Rs 5,100 crore.