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Vodafone-Idea merger edges closer with SEBI approval

Vodafone-Idea merger edges closer with SEBI approval

The merger between Idea Cellular and Vodafone India has received conditional approval from the Securities and Exchange Board of India (SEBI), moving it another step towards final clearance.

SEBI’s approval is conditional on the merger also receiving the go-ahead from the National Company Law Tribunal (NCLT). Following SEBI’s announcement, Idea and Vodafone have now submitted a request for clearance to NCLT.

The proposed $23.2 billion merger, which would create a new Indian mobile market leader, received approval from the Competition Commission of India in July. It also requires approval from the shareholders of both operators, and must receive certain other regulatory clearances.

Idea’s parent firm Aditya Birla Group is aiming to close the deal with Vodafone Group at some point within 2018. The combined entity will have around 425 million subscribers, giving it a market share of 35% based on GSMA forecasts for Q1 2018.

While SEBI has granted the deal initial approval, Idea’s sale of 0.23% of its shares before the announcement of merger in March has raised questions. The Indian regulator TRAI is currently investigating whether this transaction was legal.

The merger between Vodafone India and Idea is aimed at allowing the firms to compete more effectively in India’s cutthroat mobile market. Newcomer Reliance Jio has been offering data and voice services for free in order to build up a subscriber base, squeezing Idea and Vodafone along with market leader Bharti Airtel.

Following the completion of the merger, the resulting entity will likely retain both the Idea and Vodafone brands rather than rebranding, but will enjoy access to the combined spectrum and assets of both operators. Idea and Vodafone are expecting the deal to deliver “substantial cost and capex savings” derived from consolidation of network and IT development as well as reduced marketing, retail and customer service expenditure.

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