On Monday, Idea Cellular Limited announced the merger of Idea and Vodafone India and its wholly-owned subsidiary. This merger will lead to the creation of India's largest telecom company.
The deal seems to be the effect of the Jio market cap. We discussed in details about the key points of the deal, and the effect of the deal on Jio.
After the amalgamation, Vodafone India will be holding 45% of the combined value, while Idea promoters will have 26% of the share. The balance of 29% will belong to the public.
As per the agreement, the merger should be completed within 24 months. According to the announcement on BSEIndia, Aditya Birla Group will have the right to buy 9.5% of the stake in the entity at the rate of Rs 130 per share.
If Vodafone and the Aditya Birla Group's shareholding in the combined company are not equal after four years, Vodafone is obliged to reduce its holding in order to equalise the shareholding with that of the Aditya Birla Group over the following five-year period.
The telecom industry may see another price drop in the data plans with Vodafone-Idea coming along to share the wireless network and signals.
The entity may introduce some cheap plans due to the cost that will get cut due to the merger.
Jio gained a userbase of more than 51 million users just within three months of its launch. All the other operators are facing huge revenue loss because of Jio's New Year plan offer.
Customers have already seen a massive price cut in the 4G plans, all thanks to Jio. This deal will allow the entity to provide plans at a reasonable rate. The shares of the entity may drop, but in the long run, it has the potential to give good returns.,
Vodafone will combine its subsidiary Vodafone India with Idea, which is listed on Indian Stock Exchanges. Initially, the share price of Idea Cellular may see a drop.
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