The U.K.’s Vodafone and Aditya Birla group firm Idea Cellular are likely to finalise within a month the mega merger deal that will create India’s largest telecom firm.
The companies are likely to announce a definitive signing agreement by February 24-25.
The British telecom major has brought its ex-India unit chief Marten Pieters to work on the proposed merger.
If the deal is successful, the combined entity will create India’s largest telecom firm with a revenue share of around 40% and a subscriber base of over 380 million, according to India Ratings and Research.
The proposed merger of Vodafone India and Idea will create an entity with a revenue of around Rs. 77,500-80,000 crore besides eliminating duplication of spectrum and infrastructure capex, the rating agency said in its report.
Further, the spectrum of Vodafone India in seven circles and that of Idea in two, whose permits are expiring in 2021-22, is together valued at around Rs. 12,000 crore as per the last auction price.
These permits are not in common circles, and hence there could be potential spectrum capex synergies between the two companies.
According to the merger and acquisition rules, an entity should not hold more than 25% spectrum allocated in a telecom circle and 50% on spectrum allocated in a particular band in a service area.
The merged entity should also not have more than 50% revenue and subscriber market share. As per CLSA report, the merged entity would breach revenue market share, subscriber and spectrum caps in five markets.