The document details the merger between Vodafone India and Idea Cellular, creating the largest telecom operator in India, with its impact on the industry and estimated valuations. It discusses the strategic importance of the merger, significant synergies, and the financial valuation of the combined entity which exceeds $23 billion. Additionally, it touches on various elements of money laundering laws, case studies, and methods commonly associated with money laundering practices.

1. BY: CA SANDESH MUNDRA
SANDESH MUNDRA & ASSOCIATES
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4. IDEA & VODAFONE INDIA
Creating the largest telecoms in India
Key Highlights:
 Highly complementary combination
 The country’s widest mobile network
 ‘Digital India’ vision.
 Excellent consumer experience & industry leading coverage on back of
complementary footprint.
 Merger of equals with joint control of the combined company between Vodafone
and the Aditya Birla Group, governed by a shareholders’ agreement.
 Chairman: Mr Kumar MangalamBirla
 Significant synergies
 The transaction is expected to close during calendar year 2018, subject to customary
approvals.
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5. SYNERGIES
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6. IMPACT OF MERGER ON TELECOM
INDUSTRY
There can be initiatives based on renewal of price discipline.
 growing market in terms of subscriber base.
Vodafone and Idea will overcome their debts and huge credit will be infused in the system.
Saved both from selling off their businesses as planned initially which would directly impact the
quality of services provided by different players in the industry.
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7. VALUATION
Vodafone India and Idea Cellular had agreed to merge their operations to create the country's
largest telecom operator worth of more than $ 23 billion with a 35 per cent market share.
They would dislodge Bharti Airtel to counter the fierce price war in the world's second-largest
telecom market.
Vodafone will own 45.1% of the combined company after transferring a 4.9% stake to the Aditya
Birla Group for US$579 million in cash, concurrent with completion of the merger. The Aditya
Birla Group will then own 26.0% of the combined company
Standalone towers and Idea’s 11.15% stake in Indus Towers to be monetised
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8. EQUALISATION MECHANISM
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9. CORPORATE VALUATION
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10. It was a deal that surprised some, shocked many, and left some gaping at the wall in sheer amazement. This is what
Mark Zuckerberg did to the analysts of the financial world and to the general public when he announced that Facebook
had decided to buy 5-year old WhatsApp for a whopping 19 billion USD!
But WHY?? Take a look!
• 450 million users
• 70% active daily users
• 1 million new user registrations/day
Asia Latin America
Europe Africa
WhatsApp has a strong global reach
“I expect WhatsApp to
quickly touch 1 billion
users”
WhatsApp–
APowerhouseintheMaking
How is it possible?
Thanks to WhatsApp’s powerful features:
• Rapid text messaging
• Engaging private and group chat options
• Quick file sharing
• Sleek user interface
• Minimum system requirements and data usage
• Freemium Model (free usage first year, $0.99 from second
year)
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WHATSAPP AND FACEBOOK DEAL

11. With the desktop market saturating and smartphone clientele
exponentially growing, Facebook has been looking to establish a
stronger presence in the mobile market
FB App and Messenger reach limited to FB Users.
Only Moderate Successes.
Facebook was desperately looking for a
turn-around in the mobile segment
Another concern area of Facebook was its
User Attrition
Users frustrated with
privacy settings and
moving onto other
connecting platforms
Facebook’s Twin Goals
Increasing mobile
presence
Gaining a loyal
customer base
The 450 million “content” mobile users of
WhatsApp perfectly filled the void
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FACEBOOK’S CONCERN AND PRESENT
NEEDS

12. Deal Value – User Angle
From the users point of view, $19 billion for 450
million users translates to ~$42 per user, which is
much lesser than the value of a Facebook ($128),
Twitter ($80) or a LinkedIn user ($60).
$42 $128 $80 $60
So if the users of WhatsApp can be fairly
relied on, the acquisition value can be
counted rational to an extent
Deal Value – Revenue Angle
Presently WhatsApp incurs only marginal
expenses in terms of:
• Marketing costs
• Infrastructure costs
• Employee costs
In terms of revenue, let us assume:
• Zuckerberg streamlines subscription
system
• WhatsApp indeed reaches 1 billion users
If these assumptions hold true, WhatsApp
can make fairly good profits because of its
low cost business model
ButWhatAbouttheNumbers?!
Deal Value – Payment Mode Angle
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VALUATION

13. GOOGLE AND MOTOROLA DEAL
Key Highlights:
This is a Vertical Merger (which companies at different places in a chain of products join
together).
The main motivation of Google buying Motorola Mobility in the first place was its huge trove of
patents. The idea was that the patents would help the company with legal protection for its
widely used Android software
Motorola had 17500 patents + 7000 patents in line whereas Google just had 2000 Patents.
Together they will accelerate innovation and choice in mobile computing.
Transform it into a healthy counterweight to Samsung, which sells the overwhelming majority of
Android smartphones.
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14. VALUATION AND SYNERGIES
Google announced an agreement to acquire Motorola Mobility for $40 per share or a total of
about $12.5 billion.
Motorola holds a market share of 13.7%. This is down from the previous year's share of 20%.
The company later decided to manufacture phones on the Android platform, which saw strong
market reception based on its reviews.
Investors are wondering how an internet giant like Google can integrate with and run a
hardware company that has been bleeding cash over the last few quarters. A quick answer is
that Google can manufacture hardware in large.
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15. SELLING OF MOTOROLA
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Why ?
Google is selling Motorola, the iconic handset maker it bought for $12.5 billion in May of 2012, to Chinese PC maker Lenovo for $2.91 billion which
they call it as a ‘success’.
Google didn’t take a loss from the divestiture. Motorola never made Google any money, so it was better to remove this financial headache.
At the time of the acquisition, Motorola had no debt and $3 billion of cash on its balance sheet that Google got to keep. Google then sold off
Motorola’s cable set top box business to a private equity firm for $2.3 billion. This means that the actual loss for Google would be $4.3 billion after its
sale to Lenovo. However, there’s more.
According to the deal with Lenovo, Google will keep the majority of Motorola’s huge patent portfolio.
The company had valued those patents and other developed technology at $5.5 billion, according to a regulatory filing last year. So in terms of
valuation, a $2.9 billion sale to Lenovo doesn’t seem bad.
Apple's patent attack on Android licensees was slowing down and worrying Google's customers. Motorola had a massive patent library that can be
used defensively.

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18. Money Laundering
whoever is connected with the proceeds of the crime
◦ projecting it as untainted property
would be committing offence of Money Laundering Act, and further that
the proceeds of crime must have been derived or obtained, directly or indirectly by any person
◦ as a result of criminal activity
◦ relating to scheduled offence in terms of sub-section (u) of Section 2 of the Prevention of Money Laundering Act”
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19. Primarily, the money laundering transaction involves three
stages which have been held to be quintessential ingredients
of money laundering by High Court of Andhra Pradesh in B.
Rama Raju v. Union of India,
1. Placement stage
2. Layering stage
3. Integration stage
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20. It is also a tenet of criminal law that an act cannot be an offence before such act is declared as
an offence by a legislation in view of Article 20 (1) of the Constitution of India, which states as
under:
“No person shall be convicted of any offence except for violation of the law in force at the time of
the commission of the act charged as an offence, nor be subjected to a penalty greater than that
which might have been inflicted under the law in force at the time of the commission of the
offence.”
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21. Methods normally choosen
Smurfing – Depositing small amounts of cash
Shell Companies – receive money for goods / services never provided
Third Party Cheques / Bankers’ Drafts
Offshore Banks
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23. CASE LAW 1:
ROHIT TANDON V/S ENFORCEMENT DIRECTORATE
Facts of the Case:
The Supreme Court Friday rejected the bail plea of lawyer Rohit Tandon, who was arrested in
connection with an alleged money laundering case post demonetisation.
He was arrested after a raid on his law firm in connection with a black money probe that had
led to the alleged seizure of Rs 13.6 crore.
He was allegedly involved in illegal conversion of nearly Rs 60 crore demonetised currency.
The volume of demonetized currency recovered from the office and residential premises of the
appellant, including the bank drafts in favour of fictitious persons and also the new currency
notes for huge amount, leave no manner of doubt that it was the outcome of some process or
activity connected with the proceeds of crime projecting the property as untainted property.
The fact that the appellant has made declaration in the Income Tax Returns and paid tax as per
law does not extricate the appellant from disclosing the source of its receipt.
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24. Continued:
The property derived or obtained by the appellant was the result of criminal activity relating to a
scheduled offence.
The Enforcement Directorate had arrested him after a raid on his law firm in connection with a
black money probe that had led to the alleged seizure of Rs 13.6 crore.
Some other accused were also arrested in connection with a separate Prevention of Money
Laundering Act case.
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25. CASE LAW 2:
S C JAYACHANDRA V/S ENFORCEMENT DIRECTORATE
Facts of the Case:
Jayachandra was a suspended chief project officer of the State Highway Development
Project, Karnataka.
His involvement was in acquiring/ possessing/ exchanging/converting the old
demonetized currency notes of Rs.500/- and Rs.1,000/- into newly introduced currency
notes of Rs.2,000/- in connivance with various middle-men.
He has amassed wealth disproportionate to his known source of income.
A sum of Rs.27 Lakhs were seized from the two premises belonging to the petitioner
out of which Rs.5 Lakhs was in new currency of denominations of Rs.2,000/-.
He violated the RBI had placed an embargo from exchanging demonetized notes in
excess of Rs.4,500/-
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26. Continued:
The investigation has revealed that the accused No.1 (petitioner) has mis-used his official
position and used accused No.2, 3 and 4 to launder his ill-gotten money and used it to acquire
17 properties through 'proceeds of crime'.
These properties were mainly bought in the name of his mother in law which was then
transferred to her daughter as a ‘gift’ or were purchased and sold off in a small duration say 5
years.
The remaining cash was in the form of demonetized currency of Rs.500/- and Rs.1,000/-
possession of disproportionate assets worth Rs.1,72,73,000/- during the said check period.
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