A merger between Idea Cellular and Vodafone India moved a step closer after it received conditional approval from the country’s securities watchdog, and made a subsequent application to the National Company Law Tribunal (NCLT) for its go-ahead.

The green light from the Securities and Exchange Board of India (SEBI) – which is conditional on the NCLT’s clearance – follows approval from the country’s Competition Commission during July.

Before the $23.2 billion merger can be approved, it must be granted final approval by both operators’ shareholders, along with a number of other regulatory hurdles.

Vodafone Group and Idea’s parent Aditya Birla Group are looking to complete the deal during 2018. It will create India’s largest wireless operator with a combined base of around 425 million connections and a 35 per cent market share, according to GSMA Intelligence estimates for Q1 2018.

According to The Economic Times, although the merger received initial approval from SEBI, the regulator is investigating the legality of a purchase of 0.23 per cent of Idea’s shares prior to the original announcement in March.

Combining to compete
Idea and Vodafone India’s tie-up will, according to Vodafone CEO Vittorio Colao, enhance both companies’ abilities to compete in the heated Indian market.

Frequent free offers and aggressive pricing from challenger Reliance Jio have put significant pressure on the country’s three largest players.

Both the Idea and Vodafone brands are expected to continue after the merger, which will open access to a greater portfolio of spectrum and other assets for the operators.

A Vodafone investor presentation from March revealed the companies expect to derive “substantial cost and capex savings” from the deal including network and IT consolidation, customer service and retail synergies, and a reduction in marketing costs.