Value of Vodafone-Idea may be worth 23% more than what Voda agreed at

The valuation of each share of the merged Idea-Vodafone India entity could be more around Rs 160 a share, which is 23% higher than the Rs 130 per unit, the value that Vodafone had agreed to sell its shares to Aditya Birla Group at.

"Vodafone has been very conservative with the Rs 130 figure, but in the true sense, if one adds the $10 billion operational synergies to the Rs 72.5 a unit that has been taken to peg the enterprise value of the companies for the deal, the value of the merged entity comes to around Rs 160 a share," a Vodafone executive told ET.

Also read: Telecom experts think Jio could still beat Voda-Idea in short term

As per the deal, Vodafone has agreed to sell 9.5% additional stake at Rs 130 a share to Aditya Birla Group in the merged entity over a period of three years after the closure of the deal in 2018. This would be done as an effort to equalise the shareholding of both companies over time.

"Even the Rs 160 value doesn't take into account the revenue upside for the merged entity that is likely to be seen once the market stabilises in 12 to 18 months," a second person said. "Jio is starting to charge soon, and they are in the market to make money as well. So, prices will stabilise over time."

Also read: Idea and Vodafone heads met Modi and sought speedy clearances for merger

This official also noted that Vodafone generates Ebitda in 12 of its 22 circles, while Idea does so in 10 circles, and none of these positive circles overlap, making the merged entity Ebitda positive from day one.

As reported earlier, Vodafone and Idea are merging their operations to create India's largest and the world's second largest mobile phone company in terms of subscribers, which as per experts will benefit the Indian telecom industry.

(Image source: Netans)