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Vodafone, the UK-based mobile phone operator, has struck a deal to merge its Indian operations with rival Idea Cellular in a deal that will create one of the largest telecoms companies in the world.
The two companies confirmed on Monday that Vodafone will own 45.1 per cent of the combined group while Idea’s parent company, the Aditya Birla Group, will own 26 per cent after paying Rs 39bn ($579m) cash for a 4.9 per cent stake.
The deal, which comes amidst a brutal price war between phone operators in India, will create India’s largest telecoms group with around 380m users.
Vodafone India said the merger will generate synergies of around Rs 670bn after integration costs and other payments.
Said Vittorio Colao, chief executive of Vodafone:
The combined company will have the scale required to ensure sustainable consumer choice in a competitive market and to expand new technologies – such as mobile money services – that have the potential to transform daily life for every Indian.
Adiya Birla Group chairman Kumar Mangalam Birla, said:
For Idea shareholders and lenders who have supported us thus far, this transaction is highly accretive, and Idea and Vodafone will together create a very valuable company given our complementary strengths.
Shares in Idea jumped by up to 15 per cent after the merger was announced, before dropping back in early morning trading in Mumbai.