Kumar Mangalam Birla to head Idea-Vodafone entity?

Mumbai: Aditya Birla Group chairman Kumar Mangalam Birla has emerged as a top choice for head of combined entity even as talks of Idea Cellular and Vodafone merger were still at initial stages, according to a report in Mint.

The newspaper cited people in the know as saying that the unified entity would have 12 directors on its board, three each from Idea and Vodafone and six independent directors. "Birla appears to be a unanimous choice," newspaper quoted one source as saying.

Idea Cellular, country's third largest telecom operator in terms of subscriber base; and second Vodafone, British telecom giant, are in preliminary talks to make a combined telecom operator to take on Relaince Jio.

Bharti Airtel retains its numero uno position on the telecom landscape.

Jio, that has Mukesh Ambani-led energy behemoth Reliance Industries as its parent, last year disrupted India's telecom market with launch of free data and free voice call services. Jio has extended the free offer beyond its initial 90 days' period till March 2017.

Jio's launch forced top three telecom companies, Bharti Airtel, Vodafone and Idea Cellular, to explore ways to survive in the sector. The merger talks were started as both Idea and Vodafone don't want to lose out on subscriber base.

Interestingly, Idea Cellular has a deeper outreach in rural telecom circles whereas Vodafone boasts off a robust urban subscriber base mostly ensconced in metros like Mumbai. Based on a recent estimate, Vodafone's India arm was valued at Rs 50,000 crore, a figure much higher than Idea's market valuation of Rs 39,000 crore.

The coming together of the two key players in telecom sector would create a Rs 1 lakh crore worth telecom operator.

For a combined entity both Idea and Vodafone will have to work out a parity mechanism for making them equal partners in terms of value of equity holdings. Presently, Malaysia-based Axiata holds a 20 per cent stake in Idea Cellular.