DoT clears Idea-Vodafone merger with riders

The Department of Telecom (DoT) on Monday gave its conditional approval to the merger of Vodafone India and Idea Cellular, creating the country’s largest mobile services operator.

The DOT has asked for a payment of Rs 3,926 crore in cash pertaining to one-time spectrum charges of Vodafone. The amount can be paid either by Idea or Vodafone. The department has also asked Idea Cellular to furnish a combined bank guarantee of Rs 3,342 crore.

"Once these companies pays the amount, the final approval will be given," sources in the DOT said.

When the both the entities expressed unhappiness over the delay in giving approval of the merger by the DOT, it was learnt that the Prime Minister Office intervened and asked the DOT to expedite the process.

However the conditional approval of the deal was subject to final judgement of the court, sources said.

Earlier the DOT had asked the Vodafone to clear the one-time spectrum charges worth Rs 6,678 crore but the company challenged the decision in the court.

Following the Supreme Court order, it had paid only Rs 2,000 crore to get the deal cleared. However the DOT has asked the firm to clear pending amount before its merged with Idea Cellular.

Once merger process completes, the new entity will create the country's largest telecom operator worth over $23 billion (over Rs 1.5 lakh crore), with 35% customer market share and subscribers base of around 430 million.

The merger will also help the both the firms to tide over their debt and face competition in the industry, that has intensified after entry of Reliance Jio to the market. The combined entity will begin working as single entity-Vodafone Idea Limited.

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