Vodafone dials for backup in India telco fight
Vodafone has dialed for backup in its India fight. The UK-based telco is talking to Aditya Birla Group about an all-share merger of its Indian business with Idea Cellular, part-owned by the cement-to-retail group. It could feel the benefits beyond the subcontinent.
The two firms on Monday confirmed the talks in separate statements, but financial details were limited. The UK group said any merger would take effect through the issuing of new Idea shares to Vodafone, and would result in the latter deconsolidating its India subsidiary. Idea's statement said that "equal rights" between Aditya Birla Group and Vodafone in the combined entity were a "fundamental premise" of discussions.
The strictest interpretation of this is that Aditya Birla Group's equity stake in the new company would equal the equity value of Vodafone India. That seems unlikely.
Berenberg estimates from early January put the equity value of Vodafone India at 9.2 billion euros, while Idea's market capitalisation is about 4.8 billion euros. Alternatively, Aditya Birla Group might just have equal control in terms of voting rights in the new company.
Another workaround could be that Vodafone India sells some of its equity to Aditya Birla Group in order to equalise their stakes, or receives an equalising cash payment.
Comments