Govt approves merger of Vodafone and Idea Cellular
The government has approved the merger of Vodafone India and Idea Cellular that will create the country's largest mobile phone operator worth more than $23 billion with a 35 per cent market share, according to top officials.
The Department of Telecommunication has given its stamp of approval for the amalgamation after the two firms provided for Rs. 7,248.78 crore as one-time spectrum charge (OTSC), a senior government official told news agency PTI.
Confirming that approval has been accorded for the mega deal, Telecom Secretary Aruna Sundararajan said the government expects the market to stabilise post merger.
"We expect to see robust growth in the telecom sector with the emergence of three strong private sector players, and one public sector player," she told PTI.
The combined entity, Vodafone Idea Ltd, with nearly 430 million customers would overtake Bharti Airtel, which currently has 344 million users. The deal also comes at a time of raging price war, triggered by new entrant Reliance Jio, in the world's second-largest telecom market.
In Mumbai, Aditya Birla Group Chairman Kumar Mangalam Birla confirmed getting the nod, saying it marks the beginning of an "exciting journey".
"The actual work starts now so we will see…we are very optimistic about it," Mr Birla, who will be the Non-Executive Chairman of the combined entity, said.
Idea Cellular is part of the diversified Aditya Birla Group.
On how long it will take for the merged entity to be operational, Mr Birla said it would take "a few weeks" and added that the companies are yet to decide on the branding for the new entity.
The mega deal was announced by Vodafone India and Idea Cellular in March 2017 to take on competition from richest Indian Mukesh Ambani's Reliance Jio, which has shaken up the telecom market with free voice calls and dirt cheap data offering.
As per norms, telecom operators who were allocated spectrum without auctions and beyond the limit bundled with their licence were required to pay the market price for the radiowaves. Of the total demand raised by the telecom department, about Rs. 2,100 crore was on account of OTSC of Idea cellular and the rest for Vodafone.
Accordingly, the DoT had asked the two companies to pay Rs. 3,926.34 crore in cash and furnish bank guarantees worth Rs. 3,342.44 crore. The approval follows the two entities' recently complying with the DoT's requirement "under protest"