Idea, Vodafone pay Rs 7K cr under protest to DoT for merger

By NT Bureau Published on Jul 24, 2018 02:42 PM IST

New Delhi: Inching closer to formation of country's biggest telecom operator, Idea Cellular and Vodafone have made a joint payment of Rs 7,248.78 crore under protest to the Department of Telecom (DoT) for merging their mobile business.

"Idea Cellular and Vodafone have made payment under protest as demanded by the DoT for the merger. Rs 3,926.34 crore have been paid in cash and bank guarantee of Rs 3,322.44 crore have been furnished," an Idea Cellular official confirmed the development.

The Department of Telecom gave conditional nod for merger of these companies on 9 July and asked companies to meet the demand raised for taking merger on record.

The combined operations of Idea and Vodafone will create the country's largest telecom operator worth over $23 billion (or over Rs 1.5 lakh crore), with a 35 per cent market share and a subscriber base of around 430 million.

The 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.

It will have the capacity to provide 4G spectrum in all telecom circles of the country. According to a presentation by Idea, the combined 4G spectrum of both the companies are capable of offering up to 450 megabit per second broadband speed on mobile phones in 12 Indian markets.

With the new entity coming in force, Bharti Airtel will lose the tag of India's biggest telecom service provider to the new entity.The combined debt of both the companies is estimated to be around Rs 1.15 lakh crore.

Stakes and future

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

The Aditya Birla Group has the right to acquire up to a 9.5 per cent additional stake from Vodafone under an agreed mechanism with a view to equalising the shareholdings over time.

If Vodafone and the Aditya Birla Group's shareholdings in the combined company are not equal after four years, Vodafone will sell down shares in the combined company to equalise its shareholding to that of the Aditya Birla Group over the following five-year period.

Until equalisation is achieved, the voting rights of the additional shares held by Vodafone will be restricted and votes will be exercised jointly under the terms of the shareholders' agreement.

TDSAT asks DoT not to act on RCom notice
Debt-ridden Reliance Communications has got a temporary reprieve from telecom tribunal TDSAT till 10 August on licence and spectrum cancellation showcause notice served by the DoT.

Posting the matter for directions on 10 August, the tribunal has instructed the respondent, in this case, the Telecom Department 'not to give effect to the decision which it may take in the meantime'.

"If so advised, the respondent may file a reply or short reply by the next date and bring on record of the decision taken by them, if any. The respondent is directed not to give effect to the decision which it may take in the meantime," TDSAT said in an order.

The Anil Ambani-owned company RCom had recently approached the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) against the government's showcause notice on spectrum and licence cancellation.