DOT to seek ₹2,100 cr from Idea to clear Voda­fone merger

Hindustan Times ST (Mumbai) - - HTINSIGHT - Navadha Pandey

NEW DELHI: The Depart­ment of Telecom­mu­ni­ca­tions (DOT) will in­sist on a bank guar­an­tee for a lit­tle over ₹2,100 crore from Idea Cel­lu­lar Ltd to­wards one-time spec­trum charges as a pre­con­di­tion to ap­prove its merger with Voda­fone In­dia, a per­son aware of the mat­ter said.

The merger of Idea and Voda­fone will cre­ate the world’s sec­ond-largest and In­dia’s largest telco. It is aimed at dom­i­nat­ing a mar­ket that Mukesh Am­bani’s Reliance Jio In­fo­comm Ltd had dis­rupted with free voice calls and low data tar­iffs.

While the two com­pa­nies have sev­eral un­paid dues, which are be­ing chal­lenged, Dot’s guide­lines on merg­ers and ac­qui­si­tions (M&A) em­pow­ers the depart­ment to in­sist on pay­ment of one-time spec­trum charges by the trans­feree com­pany—in this case Idea Cel­lu­lar.

“We can­not ask the com­pa­nies for pay­ments which are un­der ju­di­cial in­ter­ven­tion, but we will ask the re­sul­tant merged en­tity to give an un­equiv­o­cal un­der­tak­ing to as­sume re­spon­si­bil­ity for such pay­ments as and when the mat­ter is re­solved,” a per­son aware of the mat­ter said re­quest­ing anonymity.

More­over, the merged en­tity will also be re­spon­si­ble for pay­ments to be made by Voda­fone for one-time spec­trum charges.

One-time spec­trum charges are payable by com­pa­nies which want to con­vert their ad­min­is­tered spec­trum or spec­trum not bought in an auc­tion to lib­er­alised or auc­tioned spec­trum. Auc­tioned spec­trum can be de­ployed flex­i­bly for any pur­pose un­like ad­min­is­tered spec­trum.

On Idea’s part, it can ap­proach the Tele­com Dis­putes Set­tle­ment and Ap­pel­late Tri­bunal for a stay against a DOT de­mand.

In a sim­i­lar case, the tri­bunal had or­dered DOT to clear the deal with­out de­mand­ing a ₹1,499 crore bank guar­an­tee sought from Bharti Air­tel Ltd for its ac­qui­si­tion of Te­lenor In­dia. DOT had then ap­proached the apex court, which last month dis­missed its pe­ti­tion.

DOT, in any case, can­not in­sist on pay­ments of li­cence fee and spec­trum us­age charges as these are cal­cu­lated as a per­cent­age of a telco’s ad­justed gross rev­enue (AGR).

REUTERS

The merger will cre­ate the world’s sec­ond­largest and In­dia’s largest telco.

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