Vastavam web: The telecom ministry (DoT) granted conditional approval to the long-pending merger of Vodafone India and Idea Cellular that will create the country’s largest mobile services operator, an official source said. “DoT has cleared the Vodafone-Idea merger yesterday. They will have to meet conditions for final approval, the source told. The department has asked for a payment of Rs 3,926 crore in cash pertaining to one-time spectrum charge of Vodafone. The amount can be paid either by Idea or Vodafone. The DoT has also asked Idea Cellular to furnish a combined bank guarantee of Rs 3,342 crore, the source further said.
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 are capable of offering up to 450 megabit per second broadband speed on mobile phones in 12 Indian markets. Vodafone will own 45.1 stake in the combined entity, while Kumar Mangalam Birla-led Aditya Birla Group would have 26 per cent and Idea shareholders 28.9 per cent.
The Aditya Birla Group has the right to acquire up to a 9.5 per cent 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.
Birla is proposed to be the non-executive chairman of the merged entity and Balesh Sharma new CEO. Idea’s chief financial officer Akshaya Moondra will head the financial operations of the new entity as its CFO. Ambrish Jain, currently the deputy MD at Idea Cellular, is set to become the new chief operating officer Vodafone Idea Ltd will hold 1,850 MHz of spectrum, which included 1,645 MHz of liberalised spectrum acquired through auctions. It will be capable of building substantial mobile data capacity, utilising the largest broadband spectrum portfolio with 34 blocks of 3G spectrum and 129 blocks 4G carriers across the country.