Buzzing stock: Idea jumps 7% post CCI nod for Idea-Vodafone merger

The stock of Idea Cellular surged more than 7 per cent on reports the Competition Commission of India (CCI) approving the Idea-Vodafone merger.

Today, the stock opened at Rs 95 from its previous close of Rs 91.90 and surged to intra-day high of Rs 99.6.

The entry of Reliance Jio has dragged down telecom players' profitability drastically and to sustain in this intensely competitive environment, the country’s two largest telecom operators Idea and Vodafone Plc’s India unit decided to combine their operations in March of this year.

The Idea-Vodafone merger will lead to create country’s largest telecom operator company. As per media reports, collectively both the entity will have a market share of ~41 per cent, in terms of revenue, surpassing current market leader Bharti Airtel which has market share of ~33 per cent. 

Vodafone India will hold ~45 per cent in the merged entity, whereas Idea Cellular promoter Aditya Birla Group will hold 26 per cent share.

Three years after closing of the deal, Aditya Birla Group will have the right to buy up to 9.5 per cent from Vodafone at Rs 130 per share. If the two companies could not bring their stakes to the same level, the Aditya Birla Group will have the option of buying more shares from Vodafone at the prevailing market price. Even after this, if both companies don’t have equal stake, then over the next two years Vodafone will sell its stake in the open market to match Idea’s shareholding level in the merged entity.

Besides, Anil Ambani-led Reliance Communications and Aircel have also decided to merge their operations. On the other hand, Sunil Mittal-led Bharti Airtel acquired the assets of Telenor (India) Communications in February.