Vodafone, Idea merger to create largest mobile telephony player with 400 million users

New Delhi: Vodafone ended month old speculation on a possible merger with Idea Cellular and confirmed on Monday that the company is in talks with the Aditya Vikram Birla group for an all share merger.

The merger, if and whenever it happens, will give shape to the largest mobile telephony player in the country. The entity with more than 400 million subscribers will replace the currently largest mobile network of Bharti Airtel, which has over 260 million users.

"Vodafone confirms that it is in discussions with the Aditya Birla Group about an all share merger of Vodafone India -- excluding Vodafone`s 42 percent stake in Indus Towers -- and Idea," the Indian entity`s parent company said in a statement.

"Any merger would be effected through the issue of new shares in Idea to Vodafone and would result in Vodafone deconsolidating Vodafone India."

Vodafone India has over 200 million subscribers, with a presence in all the 22 circles the country has been divided into. It intends to have 4G services in 17 circles, covering 2,400 towns, by the end of this fiscal.

Idea, on the other hand, says it has a similar subscriber base, also with a presence in all the 22 circles. It intends to have 4G services in 20 circles by March 2017.

“Such a merger will help Vodafone India improve its position in the mass market, while Idea Cellular would gain from Vodafone’s strength in the metro circles. Finally, the merger would create a new leader in the mobile/data industry, challenging both Bharti Airtel and Reliance Jio and further intensify the competition,” CLSA said in the report. 

The news of merger talks sent shares of Idea Cellular shares zooming up 30 percent today.