Telecom giants’ merger anticipated in the wake of Reliance Jio’s free voice and data services.
Industrialist and Chairman of Aditya Birla Group, Kumar Mangalam Birla could become the chairman of the Vodafone-Idea merged entity, the Mint reported.
The English daily on Thursday quoted two people familiar with the talks between Vodafone India Ltd and Idea Cellular Ltd as saying that the new entity would likely have 12 directors on its board – three from both side and six independent ones.
Vodafone’s stake in the merged entity will fall below 51% although it would remain higher than the Aditya Birla Group, the Mint reported. The merged entity may use the Vodafone brand under licence from Vodafone Group.
It was on last Monday, Vodafone confirmed its merger talks with Idea that will create India’s largest telecom firm with combined revenue of Rs 78,000 crore.
The new venture aims to challenge Reliance Jio Infocomm, which have already hit market leader Bharati Airtel with exciting free voice and data services.
The Mint report added that the idea of Birla as the chairman of the merged entity may help Vodafone Group to de-consolidate its subsidiary Vodafone India.
“Vodafone can’t be seen as having greater control in the merged entity,” the Mint quoted the source.
To do this under the International Financial Reporting Standards (IFRS), “a company has to demonstrate that it no longer has operating or management control in the subsidiary,” Charanjit Attra, partner, SR Batliboi and Associates Llp, told the Mint, the Hindustan Times reported.