The proposed merger of Idea Cellular and Vodafone India to create the company's largest telecom operator has moved closer to reality, with the companies receiving approval from the National Company Law Tribunal's (NCLT) Ahmedabad Bench.
The court documents confirmed that Vodafone India will hold a minimum of 45.1% of the combined company, with Idea Cellular holding a minimum of 26%.
The deal is understood to be the largest merger in Indian corporate history, and the resulting company will have the biggest market share in the Indian mobile industry.
Last year, Vodafone and Idea, which are now India's No 2 and 3 telcos, had agreed to merge their operations to create the country's largest telecom operator worth more than $23 billion, with 35 per cent market share and 387 million users. The nearest competitor is Bharti Airtel, with 24.21% in October, but 31.43% with its takeovers of Tata Teleservices and Telenor India. Back at the time of announcing the merger, both the operators said that the deal would be completed in six quarters, but it is now expected to be completed much ahead of the expected time.
Idea Cellular had earlier said that the cost reduction from the merger in turn will be used to strengthen the customer base and provide high quality service to the customers.
Both Vodafone India and Idea Cellular are selling their tower businesses to American Tower in advance of the deal for a total of $1.2 billion.
Vodafone is expected to hold around 47.5 percent stake in the merged entity and rest will be owned by Idea and promoter Aditya Birla Group.