Vodafone-Idea merger gets DoT's conditional approved
10 July 2018
The mega merger of the country’s second and third largest telecom companies – Vodafone India and Idea Cellular – has finally been approved by the department of telecommunications (DoT), although on condition that they pay up all outstanding dues.
The merger has been held up for various reasons, including the 2014-15 merger of Vodafone’s six subsidiaries, which complicated the deal. DoT was earlier also said to be seeking a deposit of Rs3,911 crore and a bank guarantee of Rs2,153 crore from Vodafone India for the merger.
Besides, there have been some delays in DoT issuing a clearance owing to the outstanding payments due from Vodafone India. While the DoT or the ministry of telecommunications haven’t objected to the merger, DoT insists that Vodafone must settle the outstanding demands of more than Rs8,100 crore on account of one-time spectrum charges (OSTC). Vodafone India has settled Rs2,450 crore on this account. But, with the telecom major challenging the OSTC demand at the telecom tribunal, the balance amount is still pending.
Once the deal officially goes through, this will be the largest merger of its kind in the telecom industry and one of the largest mergers of publicly listed companies in recent times.
The DoT was concerned about raising the demand for the balance amount due from Vodafone, as the tribunal had ordered a stay on payment of the outstanding amount, and the dispute is still pending with the tribunal.
While the DoT avoided claiming this amount since Vodafone has obtained a stay on its demand, DoT has made it conditional for the merger to come through.
The DoT has proposed a range of options to settle the issue of outstanding dues. It has proposed that Idea Cellular give an undertaking that it would settle the outstanding dues of Vodafone after the merger went through. Another suggestion is for Vodafone India to pay a deposit of Rs2,800 crore with the DoT for the deal to be sanctioned with the balance being settled after the tribunal hearings.
“DoT has set rules for merger and acquisition. Idea Vodafone merger will be cleared without a single second delay once DoT completes all statutory formalities,” minister for telecommunications Manoj Sinha said.