No special treatment for Voda-Idea merger: Minister

There will be no special treatment for Vodafone India and Idea Cellular, and both companies will have to comply with existing norms on spectrum, subscriber and revenue caps, Telecom Minister Manoj Sinha said on Thursday.

“They have to comply with the rules... there will be no special treatment,” Sinha told reporters here when asked about the government’s nod to Vodafone and Idea merger.  

While dismissing apprehensions of cartelisation in the telecom sector, following many mergers and acquisitions, the minister said that after consolidation, there will still be around five players in each service area and cartelisation is not possible. To ensure healthy competition there are guidelines on revenue cap, subscriber cap and spectrum cap, he added. 

Earlier, industry experts said that the merger of Idea and Vodafone, which will create the country’s biggest telecom services provider with a customer base of over 394 million, would face number of regulatory hurdles in terms of the spectrum cap, revenue market share and subscriber base.

The rules state that spectrum holding should not be higher than 50% in each band individually. However, Vodafone and Idea combined will breach the spectrum cap in at least five circles in the 900 MHz band, said experts.

With the government guidelines clearly stating that there will be no refund of money for excess spectrum, the merged entity may sell the excess spectrum to competitors. 

According to officials from the Department of Telecom, Vodafone and Idea together may lead in 12 of the 22 circles across India, and this imbalance has to be addressed within a year, according to existing regulatory norms. 

Even in subscriber base, the Vodafone and Idea combine (43% market share) will have 10% higher market share than nearest competitor Bharti Airtel. In addition, their base share will exceed the limit of 50% in at least nine circles.

Besides, the long-pending Rs 14,000-crore Vodafone tax dispute may crop up when the Department of Telecom took up the merger issue for discussion as the government may also ask the company to settle the issue before giving the go-head, sources said.   

On regulatory hurdles, earlier, Cellular Operators Association of India (COAI) Director General Rajan Mathews said that the amalgamation will get “quick” clearances, given the Centre’s emphasis on the ease of doing business.