Vodafone, Idea Cellular may start their operations as one entity from April: Report

After getting approvals from National Company Law Tribunal (NCLT)Ahmedabad bench, Vodafone and Idea are likely to start its operations from April 2018.

"If everything goes as per plan, we are looking at the first week of April to start operations as one entity," according to a report published in Live Mint.

The NCLT Ahmedabad bench on Friday said that "The scheme is genuine, bona fide and in the interest of the creditors and the shareholders."

"We wish to inform you that the Hon'ble National Company Law Tribunal, bench at Ahmedabad, vide its order dated January 11, 2018, has sanctioned the composite scheme of amalgamation and arrangement among Vodafone Mobile Services Limited and Vodafone India Limited and Idea Cellular Limited...," Idea Cellular said in a regulatory note on Friday.

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However, India's second largest telecom operator Vodafone is yet to receive approval from NCLT-Mumbai bench.

To recall last year on March Vodafone and Idea Cellular announced that they have reached an agreement to combine their operations in India (excluding Vodafone's 42 percent stake in Indus Towers).

Here are the highlights of the deal are

1) Vodafone to combine its subsidiary Vodafone India (excluding its 42 percent stake in Indus Towers) with Idea, which is listed on the Indian Stock Exchanges.

2) The highly complementary combination will create India's largest telecom operator1 with the country's widest mobile network and a strong commitment to delivering the Indian government's 'Digital India' vision.

3) Sustained investment by the combined entity will accelerate the pan-India expansion of wireless broadband services using 4G/4G+/5G technologies, support the introduction of digital content and 'Internet of Things'(IoT) services as well as expand financial inclusion through mobile money services for the benefit of Indian consumers, businesses, and society as a whole.

4) The merger of equals with joint control of the combined company between Vodafone and the Aditya Birla Group, governed by a shareholders'' agreement.

5) The merger ratio is consistent with recommendations from the joint independent valuers. The implied enterprise value is Rs 828 billion ($ 12.4 billion) for Vodafone India and Rs 722 billion ($ 10.8 billion) for Idea excluding its stake in Indus Towers.

6) Substantial cost and CapEx synergies with an estimated net present value of approximately Rs 670 billion ($ 10.0 billion) after integration costs and spectrum liberalization payments, with estimated run-rate savings of Rs 140 billion ($ 2.1 billion) on an annual basis by the fourth full year post completion.

7) Vodafone will own 45.1 percent of the combined company after transferring a stake of 4.9 percent to the Aditya Birla Group for circa Rs 39 billion (circa $579 million) in cash concurrent with the completion of the merger. The Aditya Birla Group will then own 26.0 percent and has the right to acquire more shares from Vodafone under an agreed mechanism with a view to equalizing the shareholdings over time.

8) If Vodafone and the Aditya Birla Group's shareholding in the combined company are not equal after four years, Vodafone will sell down shares in the combined company to equalize its shareholding to that of the Aditya Birla Group over the following five-year period.

9) Until equalization is achieved, the voting rights of the additional shares held by the Vodafone will be restricted and votes will be exercised jointly under the terms of the shareholders' agreement.

10) Vodafone India will be deconsolidated by Vodafone on the announcement and reported as a joint venture post-closing, reducing Vodafone Group net debt by approximately Rs. 552 billion ($8.2 billion). The transaction is expected to be accretive to Vodafone's cash flow from the first full year post-completion.

11) The transaction is expected to close during the calendar year 2018, subject to customary approvals.