In an effort to curb down the huge competition in the telecom market from the top rank holders, Idea and Vodafone have come together to form the biggest merger of the year. At a meeting held on 26 June, the regulatory board at Idea Cellular came together for approval of the change of name for the merger. This change will evidently replace the name “Idea Cellular Limited” to a new merged form as “Vodafone Idea Limited. Currently, Idea and Vodafone hold the second and the third rank respectively in terms of business.
During the EGM or Extraordinary General Meeting, the team shall also discuss the plans devised by the board members for raising funds with the help of nonconvertible securities that shall not cross the threshold of INR 15,000 crore. This fund shall be used to trim away the pending debt for both the companies. The merger has been initiated as a method to strengthen the fight to take on the competitive rivals namely Bharti Airtel and Reliance Jio.
Idea Cellular and Vodafone India are currently at their final stage of complete approval from the regulatory board in terms of the merger. Post merger of these telecom giants, the resulting organization shall hold big revenue of 37 percent in terms of market share while the customer based market share for the company shall cover close to 42 percent of the total users.
Commenting on the merger, Kumar Mangalam Birla, owner and chairman, Idea Cellular network said that post the regulatory approvals as well as the issuance of the fresh incorporation certificates, the old name shall be replaced with the new one as soon as possible.
In the words of Harish Bijoor, this merger and a new name is beneficial for both the companies given the fact that it carrier a bit of both. Vodafone holds a good customer base in the urban areas whereas Idea holds relevance in the rural areas. Together the companies can provide a relatable platform for the customers to look forward to in future.
Idea has already managed to raise about INR 6,750 crore via promoters and private placements for the shares. Vodafone is bringing in INR 7,390 crore for this merger providing more funds for debt clearance and market competition.
The list of the senior executives to hold post after the merger had been announced 2 months back. Balesh Sharma was announced as the CEO of the new merger to lead the new company ahead of its competitors.