Idea Cellular share reverses trend; drops on Vodafone merger approval
Unlike earlier trend, Idea Cellular shares dropped nearly 8% after its board of directors approved the merger of Vodafone India and its wholly-owned subsidiary Vodafone Mobile Services with itself.
As soon as the company announced the board's decision, the shares jumped 4%. But, soon it dropped. At 1111 hours the shares of the company were trading at Rs 99.40 per piece, down 7.88% or Rs 8.50 per piece.
AC Choksi Share Brokers Equity Head Ashish Shah, said that this drop is likely to be because of “investor confusion” on per-share value of its merger deal with Vodafone’s Indian unit, Bloomberg reported.
The company said that the merger will result in creation of India's largest telecom company with widest mobile network in the country with pan 3G/4G footprint.
In a regulatory filing, Idea said, “The board of directors at its meeting held on March 20, 2017, have approved the scheme of amalgamation of Vodafone India Limited (VIL) and its wholly owned subsidiary Vodafone Mobile Services Limited (VMIL) with the company subject to necessary approvals.”
In January-end, the companies had confirmed its 'preliminary discussions' with each other. On January 30, the shares of the company were trading at Rs 97.95 apiece and it touched a high at Rs 119.65 apiece on February 23. Which means, it gave a return of 22.1% to its investors in less than a month.
The merger talk came in with the growing competition in the telecom industry after the official launch of Reliance Jio. Jio's entry jolted the industry as it became difficult for the telecom operators particularly Idea Cellular, Bharti Airtel and Vodafone India to retain their market share.