Idea Cellular zooms 29% post Vodafone Plc confirms merger talks

Aditya Birla Group entity Idea Cellular surged as much as 29 per cent intra-day on the back of British telecom giant Vodafone Plc confirming on the merger talks between the country’s second and third largest telecom players.

Vodafone India’s UK’s parent Vodafone Plc said that it is in exploratory discussion with Idea Cellular for a potential merger between the two heavyweights. Vodafone Plc said that any merger would be effected through issue of new shares in Idea to Vodafone which will result in deconsolidation of Vodafone India.

If the planned merger goes through between the two big players it will make the combined telecom entity of Vodafone-Idea as the leading player in the country with revenue in excess of Rs 80,000 crore and having highest number of subscribers, overtaking current market leader Bharti Airtel.

The merger would be a win-win situation for both the telecom players as it would help them save on cost and enjoy operational efficiencies. The merger talks come amidst all havoc created by the arrival of deep pocketed Reliance Jio which has been offering free 4G data and voice calling for first six months, as part of its ‘Welcome Offer’.

The competition has been so severe that country's largest telecom player Bharti Airtel shed almost 50 per cent of its profits in Q3, and the damage caused to both Idea and Vodafone is expected to be worse given their already depleted balance sheets.

Therefore, the stock movement of Idea assumes importance as it has been one of the most battered stock amongst the telecom companies and the rally may continue for some more time in the future.

The stock was trading at Rs 98.30, up 26.03 per cent on NSE.