‘Voda­fone-Idea Com­bine Needs to Sell 18kcr of Ex­cess Spec­trum Be­fore Merger’

The Economic Times - - Companies: Pursuit Of Profit - Kalyan.Par­bat@ times­group.com

Kolkata: The Voda­fone-Idea Cel­lu­lar merged en­tity would need to dis­pose off nearly a whop­ping ₹ 18,000 crore of ex­cess spec­trum for the mega con­sol­i­da­tion deal to clear anti-trust hur­dles, an­a­lysts at Credit Suisse said.

The Swiss bro­ker­age ex­pects the merged en­tity to breach spec­trum caps in the 900 MHz and 2500 MHz bands in four and 12 cir­cles re­spec­tively, build­ing “a 60% prob­a­bil­ity” of the deal ac­tu­ally go­ing through.

“Anti-trust re­stric­tions would re­quire the Voda­fone-Idea merged en­tity to let go (some) ₹ 18,000 crore of ex­cess spec­trum, in­clud­ing over Rs 6,000 crore of such air­waves in the pre­mium 900 Mhz band alone in Maharashtra, Gu­jarat, Ker­ala and Haryana,” it said in a note seen by ET.

Tele­com merger and ac­qui­si­tion (M&A) rules re­quire a merged en­tity to hold up to 25% of the to­tal as­signed spec­trum and up to 50% in a spe­cific band in a ser­vice area. This apart, the rules also man­date a merged en­tity’s com­bined customer mar­ket share and rev­enue mar­ket share (RMS) does not ex­ceed 50%.

The Swiss bro­ker­age said the merged en­tity would also need to fork out ₹ 4,200 crore to the gov­ern­ment to­wards spec­trum lib­er­al­i­sa­tion fee cou­pled with a one­time spec­trum trans­fer fee on the as­sump­tion that Voda­fone In­dia’s air­waves would be trans­ferred to Idea.

Ear­lier this week, UK’s Voda­fone Group said it was in talks to merge its In­dian unit with Ku­mar Birla-owned Idea Cel­lu­lar in a cash­less deal which would po­ten­tially cre­ate the coun­try’s big­gest tele­com com­pany by cus­tomers and rev­enue mar­ket share. The Bri­tish telco had also said the deal would lead to de­con­sol­i­da­tion of Voda­fone In­dia.

Credit Suisse, how­ever, ruled out the pos­si­bil­ity of the mega merger re­duc­ing com­pet­i­tive pres­sures in the short-to-medium term as it ex­pects new­est tele­com op­er­a­tor, Re­liance Jio In­fo­comm, to re­main fiercely ag­gres­sive un­til it grabs over 30% mar­ket share, a phe­nom­e­non that would “con­tinue to drag down the fi­nan­cials of in­cum­bents Bharti Air­tel, Voda­fone In­dia and Idea Cel­lu­lar over the next 15 to 18 months”.

M&A rules re­quire a merged en­tity to hold up to 25% of to­tal as­signed spec­trum and up to 50% in a band in a ser­vice area

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.