June 18, 2018 – Monday might turn out to be a big day for Idea Cellular and Vodafone as the Department of Telecommunication (DoT) is likely to provide a conditional approval to the merger of the country’s two largest telcos, as per recent media report. This approval would provide India its largest network connectivity.
While Manoj Sinha, the telecom minister has signed the merger, a final letter might be issued on Monday, revealed sources from the department.
Also, as per the conditions of DoT, Idea Cellular would have to submit a bank guarantee worth Rs 2,100 crore as one-time spectrum charge (OTSC). Following the merger and acquisition rules, Idea would also have to seek an undertaking for paying dues from spectrum usage charge and license fee that both the companies owe to the government, reported the Economic Times.
“The department is likely to issue the letter giving conditional approval by Monday, which will seek the one-time spectrum charge to be paid immediately by Idea, and undertakings to pay dues to be paid in the future, including deferred payments,” said a source to ET.
With Vodafone’s OTSC dues being already stayed by the Supreme Court earlier, it is only Idea that has to clear its dues to the government, informed a senior official from Vodafone. As a result, the bank guarantee demand is comparably low. However, the No 3 carrier in telecom tribunal (TDSAT) can challenge this demand and if stayed, Idea and Vodafone can get a smooth way to merging of businesses.
A meeting of shareholders has been called by Idea on June 26 to fix the name of the joint entity as Vodafone Idea Ltd, 45 percent of which will be owned by Vodafone at the start and 26 percent by Idea, although both will have equal ownership rights. Gradually the shareholding too would be made equal.
The new entity with a market catering to 420 million customers and over 37 percent revenue share will have to dismiss 14 million customers in order to keep up to the merger and acquisition rules, according to estimates.
