The proposed merger of India's second largest telecom operator Vodafone and rival Idea Cellular, which is the third largest, has crossed another hurdle, with the National Company Law Tribunal giving its green signal for the deal.
“NCLT bench at Ahmedabad, vide its order dated January 11, 2018, has sanctioned the composite scheme of amalgamation and arrangement among Vodafone Mobile Services Limited and Vodafone India Limited and Idea Cellular and their respective shareholders,” the Kumar Mangalam Birla-owned Idea said on Friday.
In March 2017, Idea and the Indian unit of UK-based Vodafone agreed to merge. The Competition Commission of India as well as the shareholders and creditors of the two companies have already approved the merger of the two companies. The Department of Telecom still has to approve the deal.
On January 4, 2018, Vodafone, in a filing on the London Stock Exchange, had said that it expects the merger to be completed in the first half of the calendar 2018.
According to latest TRAI (Telecom Regulatory Authority of India) numbers, there were over 1.16 billion wireless subscribers in India as of November-end. Vodafone and Idea combined had close to 400 million subscribers, which will make the merged entity the largest telecom operator in the country, ahead of current market leader Bharti Airtel, which had 287 million subscribers.
The boards of Tata Teleservices and Bharti Airtel have already separately cleared the terms for the merger of Tata's consumer mobility business with that of Airtel.
Earlier this month, Idea Cellular unveiled plans to raise Rs 6,750 crore via preferential share allotment to promoter group companies to augment its long-term capital resources. With the promoter group increasing its stake in Idea, Aditya Birla Group will buy a minimum of 2.5 per cent stake of the merged entitiy from Vodafone to ultimately own at least 26 per cent of it. Over time, the two entities are expected to have an equal shareholding in the merged company.
Idea shares closed 1.4 per cent higher at Rs 108.60 on the BSE on Friday.