Idea, Vodafone pay ₹7,249 crore to DoT for merger

: Inching closer to formation of country’s biggest telecom operator, Idea Cellular and Vodafone have made joint payment of ₹7,248.78 crore under protest to the Department of Telecom (DoT) for merging their mobile business.

“Idea Cellular and Vodafone have made payment under protest as demanded by the DoT for the merger. ₹3,926.34 crore have been paid in cash and bank guarantee of ₹3,322.44 crore have been furnished,” an Idea Cellular official confirmed the development.

The DoT gave conditional nod for merger of these companies on July 9 and asked companies to meet the demand raised for taking merger on record.

The combined operations of Idea and Vodafone will create the country’s largest telecom operator worth over ₹23 billion (or over ₹1.5 lakh crore), with a 35% market share and a subscriber base of around 430 million.

The merger is expected to give breather to both debt-ridden firms Idea and Vodafone, from cut-throat competition in the market where margins have hit rock bottom with free voice calls.

It will have the capacity to provide 4G spectrum in all telecom circles of the country. According to a presentation by Idea, the combined 4G spectrum of both the companies are capable of offering up to 450 megabit per second broadband speed on mobile phones in 12 Indian markets.

With the new entity coming in force, Bharti Airtel will lose the tag of India’s biggest telecom service provider to the new entity.

The combined debt of both the firms is estimated to be around ₹1.15 lakh crore. Vodafone will own 45.1 stake in the combined entity, while Kumar Mangalam Birla-led Aditya Birla Group would have 26% and Idea shareholders 28.9%.

The Aditya Birla Group has the right to acquire up to a 9.5% additional stake from Vodafone under an agreed mechanism with a view to equalizing the shareholdings over time. If Vodafone and the Aditya Birla Group’s shareholdings in the combined firm are not equal after four years, Vodafone will sell down shares in the combined firm to equalize its shareholding to that of the Aditya Birla Group over the following five-year period.

NEW DELHI