Idea Cellular

Idea Cellular is on a wild roller coaster ride. In the morning session, the stock price rose almost 15% to hit an intra day high of Rs.123.75 and then it fell 15% to come down to an intra day low at Rs.92. Clearly, it is profit booking coming in at the higher rates as there has been a build of almost 50% in anticipation of this news over the past few weeks. Market grapevine has it that there could be disappointment over pricing of the deal as there are muted murmurs that the deal could have been struck at Rs.72/share. No official word yet on the contours of the deal. The company will be conducting a conference call today afternoon at 2.30pm with analysts and then all details could emerge.

The company announced its merger with Vodafone India and Vodafone Mobile Services, catapulting it to become the largest telecom company of India with almost 400 million customers, 35% customer market share and 41% revenue market share.

Vodafone will own 45.1% of the combined company after transferring a stake of around 4.9% to promoters of Idea for Rs 3,874 crore in cash concurrent with the completion of amalgamation. Promoters of Idea will hold 26 percent of the combined entity and the balance will be held by public.

Implied enterprise valuation of Vodafone India stood at Rs 82,800 crore and Idea at Rs 72,200 crore.