Vodafone, Idea pay ₹ 7,249 crore under protest for merger
₹ 3,926.34 crore have been paid to the telecom department in cash and bank guarantee of ₹ 3,322.44 crore have been furnished, says Idea Cellular
New Delhi: Idea Cellular Ltd and Vodafone India Ltd have made a joint payment of ₹ 7,248.78 crore under protest to the department of telecom for merger of their mobile business. “Idea Cellular and Vodafone have made payment under protest as demanded by the DoT for the merger. ₹ 3,926.34 crore have been paid in cash and bank guarantee of ₹ 3,322.44 crore have been furnished,” an Idea Cellular official confirmed the development.
On 9 July, the telecom department gave conditional approval for the Vodafone-Idea merger and asked the companies to meet the demand raised for taking the deal on record.
The Vodafone-Idea merger will create India’s largest telecom operator, displacing Bharti Airtel Ltd. It will be worth over $23 billion (about ₹ 1.5 trillion) with a 35% market share and subscriber base of around 430 million. The merger is expected to come as a breather to both Idea Cellular and Vodafone—battered by Reliance Jio Infocomm Ltd’s aggressive push into India’s telecom market.
Vodafone Idea Ltd, as the merged entity will be called, will have the capacity to provide 4G spectrum in all telecom circles of the country. 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% in Vodafone Idea Ltd, Aditya Birla Group 26% and Idea shareholders 28.9%. The Aditya Birla Group has the right to acquire up to a 9.5% 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 equalization 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.
Together, Vodafone India and Idea Cellular have debt of around ₹ 1.15 trillion.
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