Vodafone, Idea Cellular pay up Rs 72 billion to govt, nod for merger soon

New Delhi, Jul 24: Putting an end to the speculation on whether or not the Vodafone-Idea Cellular merger would be delayed over the spectrum charge demand made by the Department of Telecommunications (DoT), the two companies have deposited a total of Rs 72 billion in cash and bank guarantee. With the financial dues out of the way, the merger of Vodafone and Idea Cellular is likely to be approved in the next few days, a DoT source said.
The companies have deposited a bank guarantee of Rs 33.22 billion for one-time spectrum charges and Rs 39.26 billion cash for spectrum liberalisation. Having made the payment, the merged entity, to be called Vodafone Idea, could still challenge the dues, the DoT source said. The companies have deposited the amount under protest, the source said.
The firms have sought a recalculation of dues, but the DoT is yet to respond, it is learnt. To avoid a delay, the companies decided to pay the whole amount demanded by the government, a source said. Any further delay could have cost the two debt-ridden firms heavily, according to an analyst. In fact, the Vodafone and Idea top teams recently had a brainstorming meeting together, a first of its kind ahead of the merger, indicating that there’s no time to lose. They have also started joint training sessions.
Vodafone Idea will be the country’s largest telecom operator, with a revenue market share of around 37.4 per cent and more than 438 million subscribers. The UK-headquartered telecom major, Vodafone, had announced the merger of its India operations with Kumar Mangalam Birla-led Idea Cellular in March last year. The companies were hoping to complete the merger by the end of June but the process got delayed by a month. The DoT had given a conditional nod to the merger a couple of weeks ago if they paid up Rs 72 billion as spectrum charges.