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India's antitrust regulator Competition Commission of India has approved the proposed merger between Idea Cellular and Vodafone Group Plc's India unit, which will create the largest telecom operator in the country, Bloomberg reported.
The law firm advised Vodafone on the deal.
BloombergQuint confirmed the development from people in the know of the matter who requested anonymity as the order from CCI has not been published yet.
The two telecom operators had agreed to merge their operations in March. The proposed deal will see Vodafone India holding 45.1 percent of the merged entity while Idea Cellular promoter Aditya Birla Group will hold a 26 percent stake.
The entry of Mukesh Ambani’s Reliance Jio spurred consolidation in the Indian telecom market. Apart from Idea and Vodafone, Reliance Communications Ltd and Aircel Ltd have announced plans to merge their operations, while Bharti Airtel Ltd acquired the assets of Telenor (India) Communications Pvt in February.
The combined entity will have a revenue market share of 41 percent, ahead of Bharti Airtel Ltd (33 percent), and an annual revenue of over Rs 81,500 crore, according to data compiled by BloombergQuint.
Idea Cellular will issue shares representing 50 percent of the merged entity to Vodafone. The promoters of Idea Cellular will then have to pay Rs 3,874 crore to buy out 4.9 percent stake in the merged entity.
Three years after closing of the deal, Aditya Birla Group will have the right to purchase up to 9.5 percent from Vodafone at Rs 130 per share, which translates into a valuation of Rs 94,600 crore for the merged entity. If the two companies fail to bring their stakes to the same level, the Aditya Birla Group will have the option of buying more shares from Vodafone at the prevailing market price.
(This story was originally published on BloombergQuint. It has been republished with permission.)
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