Shares of Idea Cellular shot up nearly 15 per cent in Monday’s trade after the company announced merger with Vodafone India and Vodafone Mobile Services Limited (VMSL) in a deal that put Idea’s implied enterprise value at 10.8 billion dollars against Vodafone’s 12.40 billion dollars.
In a filing to stock exchanges, the company said that post the deal, its promoters will hold 26 per cent stake in the combined entity, Vodafone will hold 45.10 per cent stake while the rest will be with public.
Nitin Soni of Fitch Ratings said that the announcement is on expected lines.
“We expect the combine entity to have about 40 per cent revenue market share. In the process of integration and combining the two big operations, they might lose some revenue market share to Jio or to other incumbents. We estimate the revenue of about 11-12 billion dollars and Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) margins of 28-30 per cent, once these firms combine operations.”
Soni believes that the combined EBITDA margin could improve by 250 to 300 basis points as they would save some network of market expenses.