► Vodafone-Idea Merger Simple and Quick Facts.

It is known to all of us that two major telecom operators in India, Vodafone and Idea have decided a strategic merger for business purpose. Which eventually started a state of controversy in the telecom industry in India.

Some quick facts about this strategic move and its current status.

The ranking of the top three mobile operators in India before merger:

1. Bharti Airtel
2. Vodafone
3. Idea

After the execution of the merger, Vodafone-Idea will become the top Telecom operator in India surpassing Bharti Airtel. This merger will not only have an impact on the telecom industry but also will have a vast effect on the consumer base of India.

Source: www.telegraphindia.com

If a big corporate house is taken under consideration, no decision is taken overnight. Long, time-consuming, complex and strategic discussions are done before taking a step like a merger. The process perhaps initiated back in 2016 which was boosted by the introduction Reliance Jio and its huge popularity amongst the existing customer base day by day. Due to the "Free service" offered by Jio until 31 March 2017 and after that nominal charge for unlimited data (1GB/day cap) and national calling, the existing customers of Vodafone and Idea also started availing the facilities offered by Jio, which in turn had an impact on the data traffic of these operators. And this worked as a catalyst of this merger.

According to some market gurus, both the corporates might keep their existing identity by operating at different segments of the market. i.e. Vodafone being the operator at the rural area and Idea being the one for the urban population. Which is not likely to be a good mode of operation.

In the past, we have seen many operators like Spice, Uninor has totally vanished from the Indian Marked. The main reason is not being able to adapt the business situation and failing to compete with the existing offerings from other operators.

In this context, a strategic move like merger may play a vital role dealing with the situation. A merger is not a regular practice done by the corporates. Because it involves lots of managerial activities like "Transfer of shares", "Appointing New Officials", "Creating new Boards and Designations", "Distinguishing the new brand(s)" and much more. This is the point where the controversy started, and the regulatory bodies got involved.

The journey is not looking buttery smooth even after this mega-merger.

According to Moneycontrol.com

The Securities and Exchange Board of India (Sebi) has expressed some reservations on the merger between Idea Cellular and Vodafone. ( read full at MoneyControl )

The deal between the two entities is facing scrutiny from the market regulator as it has asked them to share details of the merger to take the process ahead.

Sebi has asked the two firms to share the methodology used for the merger process through which they arrived at the share price for acquisition.

The two telecom majors that had announced the deal in March joined hands to fight competition in the telecom sector.

The companies are also being questioned whether the price discovery was in line with the listing regulations, reports Business Standard.

Other queries raised by the regulator include:

> How did the firms arrive at the pricing of shares for the consolidation

>  Whether the merger is compliant with the Department of Telecommunications (DoT) regulations.

>  Companies have to submit promoters’ share transaction agreement

> Why was the agreement made part of the merger arrangement

To respond to all the questions raised by Sebi, companies have time till May 22. The regulator says that the queries are to make sure that small investors have an opportunity to take an informed decision about their stake in the company.

To get an approval for the merger, both Idea and Vodafone will have to follow multiple steps. The first step to get a nod from the board of director of companies is complete and the scheme of arrangement has also been submitted to the stock exchanges.

Third step involves forwarding of the scheme to Sebi along with their comments. Now, both the entities are waiting for a ‘no objection’ on the merger scheme after which it will be handed over to National Company law Tribunal (NCLT) for its approval.

As per the arrangement, Vodafone will sell 9.5 per cent additional stake to Aditya Birla Group for Rs 130 per share after they merge their telecom operations to create the country's largest operator worth more than USD 23 billion.

Aditya Birla Group has filed with the BSE the composite scheme of amalgamation between Vodafone and Idea Cellular, which stated that the merged entity shall be under the joint control of the two firms and will be governed by the shareholders' agreement.

In the merged entity, Vodafone will hold 50 per cent stake, while Aditya Birla Group hold 21 per cent.

Upon completion of merger, Vodafone will transfer 4.9 per cent shares of merged entity to Aditya Birla Group for Rs 3,874 crore.

Post such transfer, Aditya Birla Group shareholding will increase to 26 per cent and Vodafone shareholding will reduce to 45.1 per cent, according to the scheme.

The remaining 28.9 per cent will be held by other shareholders. 

According to The Hindu ( Read full article: @ The Hindu ) 

Market regulator SEBI has sought clarification from Aditya Birla Group firm Idea Cellular regarding its proposed merger with Vodafone Plc’s Indian unit.
Besides, the companies approached the Competition Commission of India (CCI) last month regarding the proposed merger and are awaiting the fair trade regulator’s nod in this regard.
In March, Vodafone India and Idea Cellular announced merger of their operations to create the country’s largest mobile phone operator worth more than USD 23 billion with a 35 per cent market share.
As part of the proposal, the British firm will own 45.1 per cent of the merged entity while the Aditya Birla group, Idea’s parent company, will hold 26 per cent after paying Rs 3,874 crore for a 4.9 per cent stake.
The remaining 28.9 per cent will be held by other shareholders.
Idea Cellular had sought approval from the Securities and Exchange Board of India (SEBI) in April for the proposed merger.
The market regulator has asked for clarifications from the merchant banker involved in the planned Idea-Vodafone merger, as per the latest update. The clarifications being sought by SEBI could not be ascertained.
An e-mail sent to Idea in this regard did not elicit any response.
Earlier, Idea said a joint notification has been filed with the CCI and the Scheme of Arrangement has been filed with SEBI and stock exchanges for their approvals.

 The situation clearly indicates that the upcoming path is not so smooth as it was looking like. The telecom giants have works to do to successfully complete the process to become one strategic business entity. Which may or may not take some more time making the telecom war tougher in the Indian market. It is a challenge for the current market leader Airtel to grow and hold its current position in terms of customer base and also for the "Black horse" Jio to strengthen its position in the telecom sector. Till then it is clear that the consumers will obviously be benefited with new lucrative offers. 

(p.s. Some part of this article is directly collected from specific sources and is used "as is". Proper reference is given in the said cases)

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