Voda Idea to expedite merger synergieshttps://indianexpress.com/article/business/economy/vodafone-idea-expedite-merger-synergies-telecom-sector-5460355/

Voda Idea to expedite merger synergies

An additional 22,000 overlapping site exits and network integration should lead to further Rs 3,700 crore savings over 30 months.

An additional 22,000 overlapping site exits and network integration should lead to further Rs 3,700 crore savings over 30 months.

Vodafone Idea on Thursday said that it will expedite the merger synergies by advancing the target by two years to FY21, enhance 4G network expansion and deleveraging. The merged entity had earlier set FY23 deadline for completing the merger synergies. The company had set the synergy target at Rs 14,000 crore by avoiding duplication of sites. It said around 60 per cent of the synergy gains, Rs 8,400 crore, will be in the form of opex reduction, majority of which (Rs 5,500 crore) will be achieved by minimising network opex. Here, Rs 1,800 crore has already accrued with 66,000 site exits in July-September quarter. An additional 22,000 overlapping site exits and network integration should lead to further Rs 3,700 crore savings over 30 months.

The company is also exploring the sale of its fibre network of over 156,000 km. The company said that its combined capex guidance for FY19/20 stands at Rs 27,000 crore which would improve its 4G coverage to 80 per cent and capacity by 2.5 times.

Vodafone Idea, which recorded a gross debt of Rs 1.26 lakh crore and a net debt of Rs 1.13 lakh crore and plans to raise Rs 25,000 crore expects that the proposed equity issue will be able to bring down the debt-equity ratio to healthy levels.

In its first media interaction post the completion of the merger of Vodafone and Idea, the combined entity’s chief financial officer, Akshaya Moondra said that the debt to equity ratio of 1.62 currently, will go to below 1:1, which is ‘healthy for any company’.

Vodafone Idea, last week, had said that it will be considering a potential of upto Rs 25,000 crore of new equity capital, and that this funding is required in order to ensure that the firm has sufficient balance sheet flexibility to successfully execute its strategy. As part of such a capital raise, the promoters, Vodafone Group and Aditya Birla Group, would contribute up to Rs 11,000 crore and Rs 7,250 crore, respectively. FE