Vodafone-Idea Merger to Be Lead by Martin Pieters

If the deal is successful, the combined entity will create the largest telecom player in the country

Telecom giant Vodafone has brought in Martin Pieters — former managing director (MD) and chief executive officer (CEO) of its Indian arm — to work on the proposed merger of Vodafone India with Idea Cellular.

Group Chief Vittorio Colao is likely to brief all business heads of the Indian arm over a conference call next week about the merger. “Pieters has reached India to oversee the proposed merger of Vodafone India with Idea Cellular. Vittorio will brief all business heads of Vodafone India over a conference call on the merger on February 24,” said a source. Vodafone declined to comment.

Pieters, longest serving CEO of a telecom firm in India, stepped down in 2015, will be succeeded by present Vodafone India MD and CEO Sunil Sood.

If the deal is successful, the combined entity will create the largest telecom player in the country, with revenue share of around 40 per cent and subscribers base of 380 million, according to India Ratings and Research.

However, given the present spectrum holding, revenue and subscriber base, both companies need to work on synergy to comply with the merger and acquisition rules.

Which say an entity should not hold more than 25 per cent of the spectrum allocated in a telecom circle and 50 per cent on spectrum allocated in a particular band in a service area.

The merged entity should not have more than 50 per cent revenue and subscriber market share. According to CLSA report, the merged entity would breach revenue market share, subscriber and spectrum caps in five markets.

The combined entity in the present scenario will breach the spectrum cap in 900 MHz band in Maharashtra, Gujarat, Kerala, Haryana and UP West. And in the 2500 Mhz band in Maharashtra and Gujarat, it said.

CLSA estimated that the excess spectrum which would need to be surrendered or sold off is valued around Rs 5,400 crore and for the merger both the companies will also have to shell out Rs 5,700 crore for liberalising radiowaves that they were allocated administratively.

According to sources, the companies are likely to request government to relax merger and acquisition rules.

Reference - http://www.business-standard.com/article/companies/vodafone-idea-merger-to-be-lead-by-martin-pieters-117021800026_1.html