Finally, “a new champion for Digital India is born“. The National Company Law Tribunal or NCLT has given its final nod to the merger of Idea Cellular and Vodafone India. Thus, paving the way for India’s largest telecom service provider, Vodafone Idea Limited. It also dethrones Airtel from the crown of India’s leading telecom operator, pushing it to the second position.
Vodafone Idea Limited will officially commence its operation today, with over 408 million subscribers in its belt. It has 340,000 broadband sites (both 3G + 4G) covering a population 840 million Indians. The telecom operator would also have the largest voice network with over 200,000 unique GSM sites which cover over 1.2 billion Indians. It has a large spectrum portfolio of 1850 MHz and over 235,000 km of fibre network. Thus, the telecom operator could offer superior consumer experience across 2G, 3G and 4G platforms covering 92 per cent of the Indian population.
The structure
Vodafone Idea Limited will have a new board of directors comprising of 12 Directors, which includes six independent Directors. Mr Kumar Mangalam Birla will be the Chairman of the new telecom entity. Mr Balesh Sharma would be the CEO or Chief Executive Officier.
When counting revenue, Vodafone Idea Limited will have a pan India Revenue Market Share (AGR) of 32.2 per cent. However, this is slightly lower than that of Airtel. Still, the new telecom entity will lead in the revenue aspect across nine telecom circles.
The new telecom entity would offer a variety of digital services and solutions to customers. This including mobile payments, Internet of Things (IoT), advanced enterprise offerings and entertainment, conveniently accessible via digital channels as well as extensive on-ground presence. The telecom operator would have the widest footprint of 15,000 branded outlets and over 1.7 million retail touchpoints across the country.
The future
According to the press statement, Vodafone Idea Ltd is committed to creating a truly ‘Digital India’ by enabling millions of citizens to connect, join the digital revolution and build a better tomorrow.
They will accelerate India’s progression towards a digital economy with a portfolio of quality products and services on offer under both its popular and loved brands – Vodafone and Idea.
“Vodafone Idea will continue to invest in developing world-class infrastructure and introduce newer and smarter technologies – IoT, high speed and secure leased lines, digital wallets, MIMO and cloud services. As the trusted partner for Indian enterprises, it will empower businesses with future-ready products and services to help them scale up, become more efficient and tap new, emerging opportunities in the digital era” said the telecom operator in a press release.
The financials
The new combined telecom operator is expected to generate Rs 140 billion annual synergies. This would include opex synergies of Rs 84 billion, equivalent to a net present value of approximately Rs 700 billion.
The telecom operator will have a strong cash balance of over Rs 193 billion post-payout of Rs 39 billion to the DoT. This is from the equity infusion of Rs 67.5 billion at Idea and Rs 86 billion at Vodafone coupled with the monetization of standalone towers of both companies for an enterprise value of Rs 78.5 billion. The company has an option to monetise an 11.15 per cent stake in Indus. This could equate to a cash consideration of Rs 51 billion.
However, the Vodafone Idea Limited has a net debt of Rs 1092 billion, as of 30 June 2018.