Idea-Vodafone merger: Deal clearance only after completion of DoT statutory process, says Manoj Sinha

The mega-merger deal of Idea Cellular and Vodafone India did not meet the expected June 30 timeline. A source told PTI that the telecom department is looking to raise a fresh demand of around Rs 4,700 crore related to one-time spectrum charges (OTSC) on the company. DoT will ask Vodafone to either clear dues or furnish bank guarantee before merger with Idea.

Now, reacting to the merger, telecom minister Manoj Sinha on Tuesday said that the government will only clear the long pending Idea-Vodafone merger immediately after the Department of Telecom (DoT) completes all statutory formalities.

"DoT has set rules for merger and acquisition. Idea Vodafone merger will be cleared without a single second delay once DoT completes all statutory formalities," Sinha told reporters on the sidelines of the inauguration of Ericsson's 5G test lab at IIT Delhi.

In 2015, Vodafone had merged its four subsidiaries Vodafone East, Vodafone South, Vodafone Cellular and Vodafone Digilink with Vodafone Mobile Services, which is now called Vodafone India.

DoT at that time has asked Vodafone to clear OTSC dues worth Rs 6,678 core but the company challenged it in court. Following Supreme Court order, Vodafone had paid only Rs 2,000 crore to get the deal cleared.

The telecom minister Manoj Sinha is learnt to have asked DoT (Department of Telecommunications) to take legal opinion whether a demand regarding OTSC dues can be sought from Vodafone India.

Telecom Secretary Aruna Sundararajan earlier had said that the clearances related to the mega merger of Vodafone and Idea Cellular are being expedited and that it "should get done" in the timeframe of June outlined by the two companies.

In June, Idea Cellular had announced that the Telecom Department has approved raising the foreign direct investment limit in the company to 100 per cent, putting its merger deal with Vodafone in the last leg of regulatory clearance.

"Idea Cellular has received approval on its application to increase Foreign Direct Investment (FDI) limit in the company to 100 per cent, from the current 67.5 per cent, from the Department of Telecom (DoT) today," Idea had said in a statement on June 4.

The approval is for total foreign investment up to 100 per cent in Idea Cellular Ltd, and total indirect FDI in its relevant subsidiaries Aditya Birla Telecom Ltd and Idea Cellular Infrastructure Services Ltd, it had then said.

The FDI approval came as a major milestone in the merger process of Vodafone India with Idea Cellular, and follows other statutory approvals received from Sebi, NSE, BSE, CCI and NCLT Mumbai and NCLT Ahmedabad.

Vodafone will own 45.1 per cent in the combined entity, while Aditya Birla Group would have 26 per cent and Idea shareholders 28.9 per cent.

The merged entity would be known as 'Vodafone Idea Ltd'.