With the Department of Telecommunications (DoT) giving a nod to an impending merger between Idea Cellular and Vodafone India, dreams of creating India's largest mobile operator is inching towards a closure. Both the telecommunications company eagerly await regulatory approvals to create the country's largest telecom company with a user base of 430 million. Vodafone has been asked to furnish a bank guarantee of about Rs 6300 Crore as deferred spectrum payment liabilities, sources said.
An Aditya Birla group company, Idea cellular would have to pay a bank guarantee of Rs 3322 Crore as one-time spectrum charges (OTSC) and Rs 3926 Crore in cash for the Vodafone spectrum under 4.4 MHz as acquirer. Idea will also have to pay Rs 3926 Crore, the differential between the entry fee paid and the market determined price of 4.4 MHz spectrum assigned to Vodafone Mobile Services in the respective circles. This has to be paid on a pro-rata basis for the remaining part from the date of National Company Law Tribunal (NCLT) approval for the remaining of the licences.
All demands relating to the licences of the merging companies should be settled before taking the merger on record, while all disputes and sub-judice demands has to be borne by Idea Cellular. The Aditya Birla Group will also have to give an undertaking to pay all existing unpaid demands, while the merged entity will have to reduce its market share based on adjusted gross revenue in Maharashtra, Gujarat, and Kerala circles to 50 per cent. One of the sources said this has to be done within one year following the final approval for the merger. The merged entity will also have to reduce its market share based across certain circles to about 50 per cent within 12 months of the merger, the said.
The DoT had earlier sought legal opinion from Additional Solicitor-General (ASG) on the merger that included raising a fresh demand for the differential between the entry fee and the market-determined price of the 4.4 MHz of spectrum administratively allocated to Vodafone.
