Idea shareholders approve change of name to Vodafone Idea
27 June 2018
Idea Cellular has finally changed its name with its shareholders approving the change of name to Vodafone Idea, after a merger of the two telecom companies got tentative approval from the department of telecommunications.
At an extraordinary general meeting held in Ahmedabad on Tuesday, Idea Cellular’s shareholders also approved a proposal to raise Rs15,000 crore via non-convertible securities, which may be used for paring debt of the combined entity.
“Change in the name of the company and issue of non-convertible securities in private placement basis… passed with requisite majority,” Idea stated in a filing with the Bombay Stock Exchange.
The change of name, however, will come into effect only after the merger is approved by the DoT, followed by an official filing with the registrar of companies (RoC).
The merger, which was expected to be closed by June-end, will also take at least a month more, as the department of telecommunications (DoT) has sought legal opinion on raising demands for dues against the two telcos.
Based on the legal opinion, DoT is set to raise the demands — as part of a conditional approval for the merger — which may amount to more than Rs11,000 crore within this week, that are sure to be challenged by the two carriers, people familiar with the development said.
DoT is in the process of finalising the one-time spectrum charge (OTSC) dues that Idea Cellular will have to pay on its own and on behalf of Vodafone India after getting the go ahead from the assistant solicitor general.
DoT is reported to have been advised that it can raise OTSC on all airwaves allocated administratively to the Vodafone Group’s India arm that are below 4.4 MHz, above 4.4 MHz and above 6.2 MHz and will now be transferred to Idea Cellular as per the merger and acquisition rules.
DoT has sought legal opinion and is prepared to face any legal challenge posed by the telcos on the demands, including any stay that any court may grant.
The companies did not comment on the changed timeline.
Once the merger becomes a reality, the country’s No 2 and No 3 carriers will create the largest telecom firm in the country with an almost 42 per cent of the customer base and 37 per cent revenue market share.
The new entity will also have a debt overhang of Rs1,14,000 crore, which it has been trying to pare by raising money in the past few months. The new funding of Rs15,000 crore is part of this.
Idea has already raised Rs6,750 crore from promoters this year and through a private placement of shares, while Vodafone is infusing Rs7,390 crore. Besides, the two have sold their captive towers to American Tower Corp for Rs 7,850 crore, which will translate to more funds for the operators.
The merged company will have Balesh Sharma as its chief executive officer. The new entity will take on rivals Reliance Jio and Bharti Airtel.