Riders apply: DoT approves merger of Idea and Vodafone

By: |
New Delhi | Published: July 10, 2018 5:42:12 AM

The Department of Telecommunications (DoT) on Monday gave a conditional approval to the much-awaited merger of Vodafone India and Idea Cellular, which basically means if the demands raised on the two firms towards one-time spectrum charges are met, the final approval will be accorded.

Idea, Vodafone, Department of Telecommunications, AGR market, NCLT, stock exchanges, OTSC, SEBIThe department has asked Idea Cellular to pay Rs 3,926 crore in cash for Vodafone spectrum and furnish a bank guarantee of Rs 3,342 crore.

The Department of Telecommunications (DoT) on Monday gave a conditional approval to the much-awaited merger of Vodafone India and Idea Cellular, which basically means if the demands raised on the two firms towards one-time spectrum charges are met, the final approval will be accorded. The department has asked Idea Cellular to pay Rs 3,926 crore in cash for Vodafone spectrum and furnish a bank guarantee of Rs 3,342 crore. The two companies are now likely to approach the Telecom Disputes Settlement and Appellate Tribunal to challenge the demands raised by the DoT.

Another condition that the merged entity has to meet is regarding its adjusted gross revenue (AGR) market share and subscriber market share to the stipulated 50% limit. The DoT has directed Idea to reduce its AGR market share in the Kerala, Maharashtra and Gujarat circles to 50% in a year from the date of the approval of the merger, which is July 9, 2018. Similarly, the merged entity’s subscriber market share, which has breached the 50% limit in the Gujarat, Haryana, Kerala, Madhya Pradesh, Maharashtra and UP (West) circles, also has to be brought down to the prescribed limit.

The merger has already been cleared by the stock exchanges, the Securities and Exchange Board of India, Competition Commission of India (CCI) and the National Company Law Tribunal (NCLT).With the DoT raising demands on Idea for final clearance of the merger, the issue has taken the same turn as the merger of Bharti Airtel with Telenor India, where the Supreme Court made it clear that the government cannot insist on telecom companies undergoing merger and acquisition to pay OTSC levied on them.

Following the apex court’s rejection of the DoT’s appeal, the department gave final clearance to the Bharti-Telenor merger. The combined entity will surpass Bharti as the country’s largest telecom operator with revenue market share and subscriber market share of 39% and revenue of more than Rs 80,000 crore.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Next Stories
1Long-pending! Telecom ministry grants conditional approval to merger of Vodafone India and Idea Cellular – Top details
2Tata vs Mistry, not unique! From Ambanis to Infosys, here are cases of high-decibel boardroom battles
3RBI raises Centre’s WMA advances to Rs 70,000 crore for July-September quarter