Over 12 crore shares of Idea were traded on NSE in morning session.
Shares of Idea Cellular were trading higher by 2 per cent at Rs 111.80 on BSE after the announcement of the merger deal.
However, the stock plunged to a low of Rs 92 following unconfirmed reports the deal may value the stock at much lower than the current market price.
Idea informed the bourses that its board on Monday approved the "scheme of amalgamation of Vodafone India Limited (VIL) and its wholly owned subsidiary Vodafone Mobile Services Limited (VMSL) with the company".
"The implied enterprise value is Rs 828 billion ($12.4 billion) for Vodafone India and Rs 722 billion ($10.8 billion) for Idea," a joint statement by the companies said.
After completion of the merger, Vodafone will own 45.1 per cent of the combined company, Idea will have 26 per cent stake while the rest will be owned by public shareholders.
Shares of Idea Cellular tumbled nearly 15 per cent after the company approved its amalgamation with Vodafone India and Vodafone Mobile Services.
Despite a positive opening, shares of the company failed to take forward the rally and tanked 14.73 per cent to Rs 92 as the trade further progressed on BSE.
At NSE, shares of the company plunged 14.56 per cent to Rs 92.35.
Idea Cellular today approved its amalgamation with Vodafone India and Vodafone Mobile Services, a move that will create the country's biggest telecom services provider with a customer base of over 394 million.
The transaction is subject to necessary approvals from concerned authorities, including SEBI, Department of Telecom, RBI etc.