Idea, Vodafone pay Rs 7,249 cr under protest to telecom department to get green signal for merger

The Idea Vodafone 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.

Press Trust of India July 24, 2018 10:51:47 IST
Idea, Vodafone pay Rs 7,249 cr under protest to telecom department to get green signal for merger

New Delhi: Inching closer to the formation of the country's biggest telecom operator, Idea Cellular and Vodafone have made 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 a 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 percent 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 is capable of offering up to 450 megabits per second broadband speed on mobile phones in 12 Indian markets.

Idea Vodafone pay Rs 7249 cr under protest to telecom department to get green signal for merger

Idea-Vodafone. Representational image.

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.

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

The Aditya Birla Group has the right to acquire up to a 9.5 percent 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.

Updated Date:

also read

UKSSSC 2022: Applications invited for Chief Constable posts, know how to apply here
India

UKSSSC 2022: Applications invited for Chief Constable posts, know how to apply here

The recruitment drive by UKSSSC is being conducted to fill a total of 272 Chief Constable posts in the Police Telecom Department

Vodafone Idea CEO says Centre doesn't want to take over company's operations
Business

Vodafone Idea CEO says Centre doesn't want to take over company's operations

VIL Managing Director and CEO Ravinder Takkar told reporters in a virtual briefing that there is no condition in the Telecom Department's letter on equity conversion option, which allows for board seats for the government.

Centre to become Vodafone-Idea's major shareholder with 35.8% stake: All about the roller-coaster ride of telco firm
Business

Centre to become Vodafone-Idea's major shareholder with 35.8% stake: All about the roller-coaster ride of telco firm

If the plan goes through, the government will become the biggest shareholder in the company, which is reeling under a debt burden of about Rs 1.95 lakh crore.