HOME > BUSINESS > PNB, Corp Bank most aggressive in going after big debtors; SBI, BoB more relaxed

Vodafone Idea merger to save Rs 7,000 cr per year; one-time cost Rs 3,000 cr

The Idea Cellular-Vodafone merger announced today will save about Rs 14,000 cr in operating expenses per year for the combined entity after four years of merger, the two companies said.

However, due to the applicability of spectrum caps on the combined entity, the deal will also cost Rs 3000 cr in present value in terms of costs associated with surrender of overlapping spectrum.

In several states, both Idea and Vodafone have copious amounts of spectrum in the 900 MHz band, and the merger will require them to surrender between 1 to 3 MHz to the government or sell the same within one year.

SAVINGS

In terms of savings, the two companies would be able to either halve the number of towers and base stations that they have, or double their capacity, without much more capital expenditure due to the merger.

They will be able to pool their fiber network, equipment and spectrum to achieve greater efficiency.

The operational efficiency expected to be generated in perpetuity due to the merger is worth Rs 70,000 cr at present, after excluding all integration costs, the companies added. Operating cost savings will comprise 60% of the expected run-rate savings, they added.

PARTNERSHIP OF EQUALS

Both Vodafone and Aditya Birla Group will have the same voting rights from the beginning, and eventually, the same equity stake in the combined entity.

The two companies have agreed not to buy or sell any shares of the merged company to a third party for the first three years to give a chance for the Aditya Birla Group to equalize its shareholding with that of Vodafone.

Immediately after the merger, Vodafone will sell 4.9% of its 50% stake to the Aditya Birla group at a price of 3,875 cr.

As a result, Vodafone will have a 45.1% stake, the AB Group 26% and the public will hold the remaining.

Over the next three years, AB Group will be able to purchase a stake of up to 9.5% from Vodafone at price that values the merged company at Rs 94,600 cr (US$14.1 billion) or Rs 150 per share.

After the above transaction, both parties will own about 36% of the combined entity at the end of the third year.

If Aditya Birla Group is not able to buy the 9.5% in time, it will get one more year provided it informs Vodafone how many shares it wishes to acquire.

If it still doesn’t manage to buy enough shares, Vodafone will have to dispose of some of its shares to equalize its shareholding with that of the Aditya Birla Group over the following five years.

While Aditya Birla Group will get to choose the chairman of the company, Vodafone will be able to appoint the CFO. The appointment of the CEO and the chief operating officer will require the consent of both, who will both have equal voting rights in the company irrespective of their shareholding.

Follow ULTRA.news
Airtel buys high-capacity 4G spectrum from Tikona in five circles Airtel Chairman Sunil MittalBharti Airtel said it has agreed to buy 4G spectrum from Tikona Digital Networks in five telecom circles, giving the company a pan-India footprint in the crucial capacity band and helping it compete on an even footing with Reliance Jio.Airtel ...
Competition Commission clears RCom-Aircel merger Anil Ambani Group said the Competition Commission of India has cleared the merger of its telecom unit Reliance Communications with the wireless operations of Aircel Cellular, owned by Maxis Berhad of Malaysia.The clearance was expected since the two companies have very small ...
Vodafone merger values Idea at Rs 109.76 per share The merger deal between Idea Cellular and Vodafone India values equity shares of the Aditya Birla Group company at about Rs 109.76 at the time of completion of the merger, 2% below its present trading value.According to the terms of the contract, when the merger of Vodafone I...
Vodafone customers to get Rs 250 cashback on Amazon Prime subscripton Amazon Prime App in IndiaVodafone said any of its subscribers that uses its website or app to subscribe to Amazon Prime service in India will get Rs 250 cash back in the form of payment balance in their Amazon account.Technically, operators in India are forbidden from gi...
RCom to offer 3GB 4G/3G data at Rs 149 Anil Ambani's Reliance Communications Ltd is about to announce a deal under which it will offer 3GB of 4G or 3G data for Rs 149 as well as unlimited on-net calls.It will also announce a competitor to others' daily limit plans. Its unlimited daily plan will be applicable to 3G...
MTNL says not aware of BSNL merger talks; stock up 16% Mahanagar Telephone Nigam Ltd, the state-owned telecommunications operator in the metro areas of Delhi and Mumbai, said it was not aware of any 'restarting' of talks related to its merger with Bharat Sanchar Nigam Ltd, the pan-India telecom operator owned by the public."We ar...
Vodafone offers 1GB/day + free calls at Rs 346 per month to counter Reliance Jio Vodafone, India's second largest telecom operator by revenue, has more or less matched newcomer Reliance Jio's aggressive tariff plan by offering 1 GB per day for one month at Rs 346, in addiition to unlimited voice calling.The plan is almost exactly similar to what Reliance ...
Reliance Jio unveils new 4G plan: 60GB at Rs 999, 56GB at 499 As expected, Reliance Jio Infocomm, the telecom operator led by Mukesh Ambani, has totally overhauled its 4G tariffs ahead of 'going commercial'.The firm had unveiled one set of tariffs in September, and said that these would apply when it started charging for its service...
Investors starting to understand Mukesh Ambani’s telecom game – Angel Broking Investors are only now starting to realize the plan that Mukesh Ambani and his telecom brainchild, Reliance Jio, have put into practice, and are therefore driving stock prices of his company higher, said Angel Broking, a retail-only stock-broker.Reliance Industries share pric...
Bharti Airtel buys Telenor India In a surprise announcement, Bharti Airtel said it was taking over Telenor India, marking the first such transaction since Idea took over Spice Telecom several years ago.Typically, companies in Indian telecom sector sell only assets, such as spectrum, and never the whole unit,...
Bharti Airtel likely to counter Reliance Jio’s 303 plan shortly Bharti Airtel, India's largest telecom company, is likely to match Reliance Jio's one-year promotional 4G tariff of Rs 303 per month, according to industry and analyst sources."They have been maintaining that they will match once Jio starts charging for customers," said a s...
Mukesh Ambani to announce 100 mln Reliance Jio customers today? Mukesh Ambani, Chairman of Reliance JioMukesh Ambani, chairman of Reliance Jio Infocomm, will make a statement today, 21 February, at 1:30 PM.The statement will be streamed via Youtube and other channels. The link to the live stream will be shared by around 12 PM.Tho...
Idea Cellular posts first-ever loss due to Reliance Jio impact Idea Cellular reported a loss of Rs 479 cr for the October-December quarter, hit by Reliance Jio's free offerings, the first loss in last 40 quarters since its IPO in 2007."The Indian mobile industry witnessed an unprecedented disruption in the quarter of Octoberto December ...
India Oil, BPCL, HPCL merger will reduce wastage of resources- Fitch A proposed merger of Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp will reduce inefficiencies across the sector and result in enormous savings, ratings agency Fitch said.It would also create an entity that is better placed to compete globally for resourc...
Reliance Jio is carrying 94% of India’s mobile data, Airtel 2% – Report Incumbents like Bharti Airtel, Vodafone and Idea Cellular are far behind newcomer Reliance Jio in terms of both data coverage and 4G coverage, a report by financial services company Credit Suisse said."Among the cities we surveyed, Airtel/Vodafone/Idea had good coverage in 10...
Facebook biggest beneficiary of Reliance Jio free data It's common knowledge that Reliance Jio's free data service has massively increased Internet usage in India, but a new report throws light on what categories have been benefited and which have not.The biggest beneficiary of the free data offer from Reliance Jio is -- yes,...
Wipro buys InfoSERVER, a Brazilian IT outsourcing company Weeks after acquiring Appirio, Wipro is at it again. This time, it is buying InfoSERVER, an IT services provider focused on the Brazilian market, for $8.7 Mn (Rs 60 cr). Two-decade old InfoSERVER provides custom application development and software deployment services, th...
Reliance Jio NOT TO EXTEND free data offer after March Reliance Jio will not be extending its Happy New Year free data offer beyond March 31, according to our sources in the company.The clarification comes in the wake dozens of reports claiming that it will extend the free scheme beyond the March 31 deadline into June."There...
Idea Cellular – Vodafone merger announcement soon? Idea Spectrum HoldingIdea Cellular has put off the trimonthly meeting of its board of directors scheduled to take place tomorrow, raising speculation that it may soon announce a merger or deal with Vodafone India.The meeting was supposed to take on-board results  of the ...
Vodafone halves 4G data prices: 4 GB at 255 | 22 GB for 999 Vodafone has halved data prices, six months after cutting them by about 40%.Under the new 4G tariff announced today, customers will get 4 GB of data for Rs 250 and 22 GB for Rs 999.These are roughly half of the prevailing data rates in the market.The current data pric...
Idea Cellular increases free data in unlimited scheme by 4 times Idea Cellular today increased the free data allocation on its existing unlimited calling packs.Compared to 1 GB of 4G data that customers were getting with the Rs 348 pack, they will now get 4 GB.Similarly, the free data allocation for those who do not have 4G handset...
SUPERHOUR: The SECRET behind Vodafone’s Rs 16 offer It is no secret that India's second biggest telecom operator by revenue -- Vodafone -- is under threat from a rapidly growing No 3 -- Idea Cellular -- and an aggressive newcomer -- Reliance Jio.Though Idea is still behind the British firm when it comes to total revenue, I...
Vodafone 4G reaches UP West; Goa, Chennai, Punjab next Vodafone has launched its 4G network in UP West and Uttarakhand offering "4 times" as much data for a 1GB pack.Among the first wave of cities are Dehradun, Haridwar, Aligarh, Nainital and nine other prominent business, tourism and educational hubs."4G services will so...
Tata Steel acquires Brahmani River Pellets at Rs 900 cr EV Tata Steel Limited said that it has executed definitive agreements to acquire 100% equity shares of Brahmani River Pellets Limited (BRPL) from Aryan Mining and Trading Corpn Private Limited (AMTC) and other companies in the Moorgate Industries Group (MIG).The transaction...
Reliance Communications sells its towers to Brookfield for $1.6 bln Reliance Communications Ltd announced the signing of binding agreements with Brookfield Infrastructure for the sale of nationwide tower assets to Brookfield Infrastructure Partners LP and its institutional partners.RCOM will receive an upfront cash payment of Rs. 11,000 c...