The Department of Telecommunications (DoT) has granted a conditional clearance to the merger of Vodafone India and Idea Cellular, a combination that would create the country’s biggest mobile company. Vodafone Group Plc’s CEO-designate and current CFO Nick Read met Minister of State for Communications (Independent Charge) Manoj Sinha and Telecom Secretary Aruna Sundararajan on Tuesday following the receipt of the letter of approval from the ministry. While the two companies had received an unconditional clearance from the Competition Commission of India last year, the DoT has asked them to pay out a total of over Rs 6,000 crore upon which the government’s clearance is conditional. According to sources, the DoT has sought Rs 3,976 crore for one time spectrum charge of Vodafone India, and a joint bank guarantee of Rs 3,342 crore. The DoT’s conditions are based on the spectrum cap guidelines, which were eased by the Cabinet earlier this year. The combined firm, which will be known as Vodafone Idea Ltd, will create the country’s largest telecom operator worth over $23 billion, with a 35 per cent market share and a subscriber base of around 430 million. Currently, with around 310 million subscribers, Bharti Airtel is the biggest mobile company in India. In the new merged entity, Vodafone Group will own 45.1 per cent stake, Idea’s parent Aditya Birla Group will have 26 per cent and the remaining 28.9 per cent will be held by Idea’s shareholders. The Aditya Birla Group has the right to acquire up to 9.5 per cent additional stake from Vodafone under an agreed mechanism with a view to equalising the shareholdings over time. Post the meeting with DoT’s top officials, Read confirmed having received the letter approving the merger. “We are happy to receive the letter,” he said. However, senior Vodafone executives did not respond to queries over their plans to make payment and furnishing bank guarantee.— With PTI
