Idea shares tank nearly 10% after Vodafone merger announcement; market cap dips by Rs 3,692 cr

New Delhi: Shares of Idea Cellular on Monday tumbled nearly 10 percent, wiping out Rs 3,692 crore from the company's market valuation, after the announcement of the merger of the Aditya Birla Group-run firm with Vodafone India.

Idea's stock plunged 9.55 percent to end at Rs 97.60 on the BSE. During the day, it plummeted 14.73 percent to Rs 92. On the NSE, it dived 9.62 percent to close at Rs 97.70.


idea_celluarlogoIBNLIVEFollowing the decline in the stock, the company's market valuation fell by Rs 3,691.87 crore to Rs 35,170.13 crore. On the volume front, 271.90 lakh shares of the company were traded on the BSE and over 20 crore shares changed hands on the NSE during the day.

"Telecom sector has undergone changes over the years. While on one hand, the sector witnessed consolidation in terms of players, on the other hand, competitive intensity has been equally high. In the current scenario, while the merger of Vodafone-Idea makes them dominant player, the competition could still be high in the data business within the industry," Abhishek Anand, Fund Manager Centrum Broking Ltd, said.

Vodafone India and Idea Cellular on Monday announced the merger, creating the India's largest mobile operator by customer and revenue market share.

The merged entity, which will come into force over the next two years, will be headed by Kumar Mangalam Birla as Chairman.

The all-share merger for both partners excludes Vodafone's 42 percent stake in Indus Towers and will be effected through issuing new shares in Idea to Vodafone and
result in Vodafone deconsolidating Vodafone India.

Vodafone will own 45.1 percent in the new company after transferring 4.9 percent to the Aditya Birla group for Rs 3,874 crore in cash concurrent with completion of the merger. Idea will hold 26 percent of the combined entity while the rest will be owned by public shareholders.

Among other telecom players, shares of Bharti Airtel ended 0.76 percent higher, while Reliance Communications slipped 0.26 percent on BSE.

Updated Date: Mar 20, 2017 19:50 PM

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