Setback to Idea Cellular, Vodafone, as mega merger may get delay ahead; here's why
Telecom giant Idea Cellular and Vodafone India will have to wait even further now to join hands. In the latest hurdle being known is that, as the telecom department reportedly plans to raise a fresh demand of Rs 4,700 crore against Mumbai-based Vodafone
Telecom giant Idea Cellular and Vodafone India will have to wait even further now to join hands. In the latest hurdle being known is that, the as the telecom department reportedly plans to raise a fresh demand of Rs 4,700 crore against Mumbai-based Vodafone. In telecom sector, Idea and Vodafone deal is considered as the mega-merger as an outcome to take on Mukesh Ambani backed Reliance Jio.
Consolidation trend took place in this industry when RJio stepped in with freebies, unlimited data and cheap recharge packs. RJio has gotten into nerves of Vodafone and Idea who have been witnessing losses in their earnings. Therefore, joining hands seemed like a major game against RJio, but time is clicking and looks Idea and Vodafone's long pending deal will be further delayed. Earlier June 30 deadline was set for completion of the deal.
An official source told PTI,"Vodafone India had merged its all arm into one company and there are dues 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." Vodafone East, Vodafone South, Vodafone Cellular and Vodafone Digilink were merged with Vodafone Mobile Services in 2015. The merged entity is now called Vodafone India.
The Department of Telecommunications (DoT) asked the British Telecom major to pay OTSC dues of Rs 6,678 core. However, the company challenged it in court and paid Rs 2,000 crore following a Supreme Court order to get the deal cleared. The telecom minister Manoj Sinha is, according to the report, considering to raise a demand on Voadafone India regarding OTSC dues.
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A source reportedly said that DoT has taken legal view and now it is clear that a demand can be raised from the telecom major. The fresh demand may come next week. The PTI report also highlighted that the demand will be in addition to bank guarantee of Rs 2,100 crore that DoT will seek from Idea for OTSC dues.
The merger entity is expected to become the couuntry's largest telecom company. The merged entity will be named as Vodafone Idea, subject to Idea Cellular sharholders' approval.