Vodafone/Idea Cellular merger a step closer after court OK

By:
Alan Burkitt-Gray
Published on:

India’s National Company Law Tribunal says yes to $23bn merger between Vodafone India and Idea Cellular

The $23 billion merger of Vodafone India with Idea Cellular has taken a major step forward after India’s National Company Law Tribunal gave its approval to the deal.

Yesterday’s decision means only the permission of the government’s Department of Telecom is needed for the merger to be completed.

Two judges, chairing the tribunal in open court in Ahmedabad, gave their sanction to the merger after a petition brought by Idea Cellular.

The court documents confirmed that Vodafone India will hold a minimum of 45.1% of the combined company, with Idea Cellular holding a minimum of 26%. Of the remaining 28.9%, the public shareholding in the merged company will be a minimum of 25% of the total.

The deal is understood to be the largest merger in Indian corporate history, and the resulting company will have the biggest market share in the Indian mobile industry.

According to figures from the Telecommunications Regulatory Authority of India (Trai), Vodafone had 17.68% of the market at the end of October 2017 and Idea had 16.20% – giving the combination a 33.88% share. The nearest competitor is Bharti Airtel, with 24.21% in October, but 31.43% with its takeovers of Tata Teleservices and Telenor India.

The two companies have already jumped all the other hurdles to reach a merger. The Competition Commission of India approved the deal on 24 July 2017. Over 99% of Idea Cellular’s shareholders voted in favour on 13 October 2017.

Both Vodafone India and Idea Cellular are selling their tower businesses to American Tower in advance of the deal for a total of $1.2 billion. Idea Cellular, which is controlled by the Aditya Birla industrial and commercial group, announced last week that it plans to raise the equivalent of $1.1 billion in equity in preparation for the merger with Vodafone.