Kumar Mangalam Birla ‘unanimous’ pick to head Voda-Idea combine

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Kumar Mangalam Birla, Chairman of Aditya Birla Group, could be appointed chairman of the entity that will be created out of the proposed merger between Idea Cellular

and Vodafone India, according to a report in Mint. The report quoted a person privy to the preliminary talks between the telecom giants as saying that Birla appears to be the unanimous choice for chairman. The person said that Vodafone cannot be seen as having greater control in the merged entity, and Birla’s appointment would help it make the case that it has deconsolidated its subsidiary Vodafone India.

Another person in the know that the merged entity would have 12 directors on its board – three from either side and six independent ones.

While an Idea spokesperson declined to comment, spokespersons for Vodafone India and its parent Vodafone Group Plc did not respond to e-mails. A spokesperson for the Aditya Birla Group, which owns Idea Cellular, said that any talk of appointments is premature, according to the report.

According to the two people, Vodafone’s stake in the merged entity will fall below 51% although it would remain higher than that of the Aditya Birla Group.

The merged entity may use the Vodafone brand under licence from Vodafone Group.

Vodafone Group had to write off about Rs35,000 crore in its Indian business last year. Idea posted a net profit of Rs 3,080 crore in FY16, compared with Rs3,193 crore in FY15. The company had net consolidated debt of Rs41,594 crores as of March 31 2016.

In what would create India’s largest telecom company with revenues of over Rs 80,000 crore, Vodafone Plc had on January 30 said that it is in exploratory discussions with the Aditya Birla Group’s telecom arm Idea Cellular for a merger.

CNBC-TV18 had in August reported that the two telecom players are in exploratory talks for a possible merger.

The merger, if it goes through, will create India’s largest telecom player both in revenues and subscribers, taking on the likes of market leader Bharti Airtel, and Reliance Jio. The latest entrant in the telecom sector, Reliance Jio is fast acquiring subscribers on the back of free voice and data services under its Happy New Year offer.