Govt approves Idea, Vodafone merger
NEWDELHI: India will soon have a new No. 1 telecom operator with the department of telecommunications (DoT) giving its final approval to a proposed merger of Vodafone India and Idea Cellular. The new merged entity will overtake Bharti Airtel as India’s largest mobile phone operator.
“We have given final approval for the merger as the companies have paid the required dues,” a senior official from the DoT said, requesting anonymity.
The department had on July 9 raised a demand for ₹3,900 crore in cash and ₹3,300 crore in bank guarantees towards one-time spectrum charges to be paid as part of the merger and acquisition guidelines.
One-time spectrum charges are payable by companies which want to convert their administered spectrum or spectrum that was not acquired through auction to liberalised or auctioned spectrum. Auctioned spectrum can be deployed flexibly for any purpose, unlike administered spectrum.
The approval creates a new entity, Vodafone Idea Ltd, in the hyper-competitive telecom sector and take on billionaire Mukesh Ambani’s Reliance Jio Infocomm Ltd. Since its launch in 2016, Jio has ushered in a price war hurting the revenue stream of existing operators.
The merged entity will have to apply at the Registrar of Companies to register Vodafone Idea Ltd and wait for DoT to transfer licences of both operators to the new company.
“Vodafone’s bank guarantees towards yearly instalments of payments of spectrum will need to be replaced by Idea,” said the official cited above. “Banks will need to amend the guarantees. The companies will start this process now. Rest all conditions have been adhered to.”