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20 March 2017
| Alan Burkitt-Gray
Vodafone’s merger of its Indian operations with Idea Cellular will not affect the operations of Vodafone Global Services within the country.
However the merger of the two companies’ retail
businesses will create the largest mobile operator in India,
with 400 million customers and a market share of over
Vodafone group CEO Vittorio Colao said: "The combination of Vodafone India and Idea will create a new
champion of Digital India founded with a long-term commitment
and vision to bring world-class 4G networks to villages, towns
and cities across India."
He confirmed that global services will remain with the UK-based
The mobile merger, which will not be completed until 2018, will
enable both companies to economise on 4G investment, said Nick
Read, the group CFO. Vodafone has already started building LTE in its top 12 markets
– or circles – but the two will not be able
to collaborate until the deal is complete.
"We were previously only strong in 12 circles," said Colao in a
conference call with Capacity and other media on Monday. The
combined company will be in first or second position in the
market in 21 out of India’s 22 regions, and will
have enough spectrum to provide new 4G services. "We have the
depth of spectrum in those circles."
Vodafone and Idea – which is controlled by the Aditya
Birla group, a conglomerate with interests from cement to
financial services – will eventually own identical
stakes in the combined company, after some adjustments over the
first four years after completion.
As well as Vodafone’s enterprise and wholesale
services, also excluded from the deal are stakes in Indus Towers, which was set up in 2007 and
provides cell towers to Vodafone, Idea and rival operator
The companies say that the implied enterprise value of the
combined operation will be is $12.4 billion for Vodafone India
and $10.8 billion for Idea excluding its stake in Indus Towers.
They say that there will be synergies of $10 billion after
integration costs and spectrum liberalisation payments, and
run-rate savings of $2.1 billion a year by year four after