MUMBAI: Vodafone India and Idea Cellular have paid Department of Telecommunications (DoT) Rs 72 billion in cash that was the key condition for approving their merger. 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.
“Idea has submitted its compliance to the DoT’s conditional approval letter dated July 9 2018, for the merger of Vodafone India Ltd and Vodafone Mobile Services Ltd with Idea Cellular Ltd, including the payment of Rs 3,926.34 crore (in cash) and bank guarantee of Rs 3,322.44 crore. With this we hope to get final approval from DoT for the merger at the earliest,” said a spokesperson from Idea as quoted by Economic Times.
To avoid any kind of delay the two companies- Idea and Vodafone decided to pay the full amount demanded by the government. The two companies have 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. Headquartered in UK, 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 Vodafone – Idea merger is expected to make the country a three player universe, one of the biggest being Reliance Jio, which has captured a revenue market share of around 20 per cent in just 18 months of commercial operations. Recently, Bharti Airtel (India) CEO Gopal Vittal had said that the telecom sector was set to have just three big players holding similar market share.
If that’s the case, then Vodafone Idea could lose some market share as Airtel and Jio are expected to continue to exert pressure on margins.
The companies have earlier announced that Kumar Mangalam Birla will be at the helm as non-executive chairman while the Vodafone insider and current chief operating officer (India) Balesh Sharma will be CEO of the merged entity.
