Kumar Mangalam Birla owned Idea Cellular has received approval from National Company Law Tribunal (NCLT)-Ahmedabad for its proposed merger with Vodafone Mobile Services and Vodafone India.
“The scheme is genuine, bona fide and in the interest of the creditors and the shareholders,” said the Ahmedabad bench. Vodafone is awaiting its approval from the NCLT –Mumbai bench.
Both telcos have received nods from SEBI, shareholders, Competition Commission of India (CCI) and will have to get clearances from the Department of Telecommunications (DoT).
The $23 billion merger — announced on March 20 — if completed will create India’s largest telecom firm, which will be better placed to take on the threat posed by Reliance Jio Infocomm.
Idea Cellular had earlier said that the cost reduction from the merger in turn will be used to strengthen the customer base and provide high quality service to the customers. The higher spectrum availability and larger scale radio access along with re-deployment of overlapping equipment from rationalised sides will also lead to lower capital expenditure.
Under the agreement, Vodafone will own 45.1% of the combined company after transferring a 4.9% stake to the Aditya Birla Group for Rs 3,900 crore in cash, concurrent with completion of the merger. The Aditya Birla Group will then own 26% of the combined company and Idea’s other shareholders will own the remaining 28.9% stake. Beyond this, it can pick up another 9.5% stake from Vodafone under an agreed mechanism with a view to equalising the shareholdings over time.