Vodafone Idea Likely to Get Govt's Approval for a Mega Telecom Merger

Vodafone Idea Likely to Get Govt's Approval for a Mega Telecom Merger

author-image
SMEStreet Desk
New Update
Sunil Sood, Vodafone India, SuperNet

Department of Telecom,  Govt.  of India is likely to approve the merger of Vodafone India and Idea Cellular that will create the country's largest mobile service operator with proposed name of Vodafone Idea Ltd.

"DoT is expected to clear the Vodafone-Idea merger on Monday. The certificate will be handed to them," said an official source.

Idea and Vodafone have decided to combine their operations to create the country's largest telecom operator worth over $ 23 billion (or over Rs 1.5 trillion), with a 35 per cent market share and a subscriber base of around 430 million.

The proposed 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.

The combined debt of both the companies is estimated to be around Rs 1.15 trillion.

"The merger will be taken on-record after Idea furnishes required bank guarantee and gives undertaking of owning the liabilities of Vodafone India that may arise in future," the source said.

The Department of Telecom (DoT) will seek a bank guarantee of around Rs 21 billion pertaining to one-time spectrum fee of Idea Cellular and undertaking that the resultant will clear dues pertaining to one-time spectrum fee and other sub-judice matter in accordance with the court's order.

Idea will be asked to replace one-year bank guarantee of Vodafone India submitted for deferred spectrum payment.

Vodafone and Idea will have to give undertaking of clearing dues that are sub-judice as per decision of the courts, the source said.

Idea will hold extraordinary general meeting on June 26 to change its name to Vodafone Idea Limited following the completion of merger.

Vodafone will own 45.1 per cent in the combined entity, while Kumar Mangalam Birla-led Aditya Birla Group would have 26 per cent and Idea shareholders 28.9 per cent.

Vodafone Telecom TRAI Department of Telecom Idea