With India’s telecom industry going through a major churn due to a predatory price war unleashed by Reliance Jio Infocomm, many players are either exiting the market or going for mergers.
The country’s second largest mobile phone operator Vodafone and the third largest player Idea Cellular had initiated the merger process in March and hope to close it by 2018.
Idea has sought the telecom department’s (DoT) nod for its proposed $23-billion merger with Vodafone India, reports Economic Times. The proposed merger would result in creation of the country’s largest telecom provider by subscriber and revenue market share.
The two companies have already got the approval of the country’s anti-monopoly watchdog Competition Commission of India.
In the merged identity, UK’s Vodafone Group will have 50% stake, while Idea promoters Aditya Birla Group will have 21%. Under the terms, Aditya Birla will have the right to gradually increase its stake in the combined entity, while Vodafone will reduce its holdings, with both partners eventually owning equal stakes.
However, the merger will have to adhere to spectrum cap rules set by the government. Under these norms, an operator can hold only up to 25% of the total spectrum allotted in a circle and up to 50% of the airwaves allotted in any one bandwidth. Hence, they will have to surrender or sell off some of the spectrum.