CCI approves Vodafone-Idea merger

The Competition Commission of India (CCI) has approved the Vodafone and Idea Cellular merger. The two had announced $23 billion deal to create India's largest entity in the telecom sector.

Shardul Amarchand Mangaldas and Co who advised Vodafone India and Vodafone Mobile Services on the deal said that the regulator has "unconditionally" approved merger of the telecommunications businesses of Vodafone India and its wholly-owned subsidiary Vodafone Mobile Services with Idea Cellular, PTI reported.

Idea Cellular too confirmed the approval to the merger under sub section (1) of section 31 of the Competition Act. "The transaction is expected to close during calendar year 2018, subject to customary approvals,” the company said in a statement on Monday.

The merged entity will have almost 400 million customers and a 41 percent revenue market share, making it the biggest telecom operator with widest network coverage in India. The implied enterprise value will be about $12.4 billion for Vodafone India and $10.8 billion for Idea, excluding their stake in Indus Towers.

Mergers and acquisitions beyond a certain threshold require approval of the Competition Commission of India, which keeps a tab on unfair business practices across sectors. Notably, while CCI has given unconditional approval, the two entities are yet to receive approval from the Securities and Exchange Board of India (Sebi).

Post the transaction, Vodafone will own 45.1 percent stake in the merged entity while the Aditya Birla group, Idea's parent, will have 26 per cent shareholding after paying Rs 3,874 crore cash for a 4.9 percent stake. The remaining 28.9 percent will be held by other shareholders.

The Vodafone-Idea merger will help the companies to put up strong competition to the new entrant in telecom market- Mukesh Ambani's Reliance Jio.