Mumbai: The mega merger deal between Aditya Birla Group firm Idea Cellular Ltd and Vodafone India Ltd on Monday crossed a major hurdle with antitrust regulator Competition Commission of India (CCI) approving the proposal, two people aware of the development said.
In March, the boards of Idea and Vodafone India approved a $23 billion merger of the two companies, excluding the latter’s 42% stake in Indus Towers Ltd.
The merger is expected to create India’s largest telecom company.
“CCI today has notified both the companies of its go-ahead to the merger. This is the first major regulatory hurdle that the merger deal has crossed. There are more regulatory clearances the deal needs, which will be worked upon in coming months," said one of the two people cited above, requesting anonymity as he is not authorized to speak to reporters.
The merger is expected to be completed in 2018.
Spokespersons for Vodafone India and Idea could not be immediately reached for comment.
The merger will create the world’s second largest and India’s largest telecom, overtaking Bharti Airtel Ltd, Mint reported in March.
It will have almost 400 million customers with 35% customer and 41% revenue market share.
It will have a revenue of Rs81,600 crore and an operating profit of Rs24,400 crore.
Together, Idea Cellular and Vodafone India have a debt of Rs1.08 trillion.
Initially, Vodafone will be the dominant partner in the merged entity, with a 45.1% stake after transferring 4.9% to the Aditya Birla Group for Rs3,874 crore.
The Aditya Birla Group will own a 26% stake, with the right to acquire up to a 9.5% stake from Vodafone Group PLC.
If that doesn’t happen by the end of the fourth year, “Vodafone is obliged to reduce its holding in order to equalise its ownership with that of the promoters of Idea over the following five years," Idea had said in statement while announcing the merger plan.
The Vodafone-Idea merger will help the two companies put up a stronger fight to the latest telecom entrant—billionaire Mukesh Ambani’s Reliance Jio Infocomm Ltd—which has disrupted the market with free voice calls and low data prices.