DoT gave approval to the merger between Vodafone India and Idea after both the telco giants paid Rs 7,268.78 crore to the government only days before
The long-halted merge between telco majors Vodafone India and Idea Cellular is finally happening as new reports have cited today that the Department of Telecommunications (DoT) has finally given approval to the combined entity.
Shares of Idea Cellular closed 4.57 per cent higher
Licenses of Vodafone Mobile Services Limited (VMSL) and Vodafone India must be transferred to Idea Cellular Ltd along with the assets and liabilities of both the Vodafone companies, individuals knowing about the merger stated.
An official from DoT reportedly confirmed the merge and said, “The approval letter, however, includes the conditions that the merged entity will have to comply with the outcomes of pending cases in the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) and other courts.”
He added, “Bank guarantees for deferred spectrum payments that Vodafone owes to DoT will be amended by the banks concerned, and will be transferred to Idea Cellular since that will be the entity that will hold the licenses.”
Kumar Mangalam Birla owned Idea Cellular’s shares closed at Rs 57.35, which was 4.57 per cent higher on the Bombay Stock Exchange (BSE), whose benchmark index Sensex received 140 points to end at 36,984.64.
Final approval to be completed after the last part of formalities
According to the Press Trust of India (PTI), both Vodafone India and Idea Cellular will now approach the Registrar of Companies (RoC) for the mandatory filings for approval that will fulfil the last leg of the merger formalities.
The news comes only days after both the telco giants gave in to the demands of DoT and “under protest” made payments of Rs 7,268.78 crore to the government body in the form of bank guarantees and cash. While Vodafone India paid Rs 3,926.34 crore in cash, Idea Cellular had submitted Rs 3,322.44 crore of bank guarantee.
Idea Cellular to share its Q1 report on July 30
Ever since the rise of Reliance Jio Infocomm in September 2016, Idea has been suffering losses every quarter. In fact, Jio along with Bharti Airtel will be the biggest competitors of the combined entity. The merge will now put Vodafone-Idea (as the combined entity will be known) as the largest telecom operator in the country, dethroning Bharti Airtel. The entity will have 430 million mobile subscribers and a business worth US$ 23 billion.
This news also comes after Vodafone released in an official statement today that their mobile subscribers have declined 3 million quarter-by-quarter after the quarter update that ended on June 30, was released. Also, the telco major’s revenue declined by 31.1 per cent to 959 million pounds as well.
Idea Cellular’s first quarter report is all set to be announced on Monday, July 30.
