DoT Likely to Grant Clearance to Idea-Vodafone Merger Tomorrow

The Department of Telecommunications is likely to approve the Vodafone India and Idea Cellular merger on Monday, as per a new report. The newly formed entity which will be known as Vodafone Idea Ltd will be the biggest telco of the country. An official source from PTI said “DoT is expected to clear the Vodafone-Idea merger on Monday. The certificate will be handed to them.” The combined entity after the Vodafone-Idea merger will be even larger than the current telco leader Bharti Airtel. This newly formed company will be worth over $23 billion (or over Rs 1.5 lakh crore) and will boast of a 35% market share with a subscriber base being made by around 430 million users.

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This merger has been expected to give relief to both the companies which are debt-ridden in this market of cutthroat competition. The combined debt of both the companies stands at a staggering amount of Rs 1.15 lakh crore.

An official source stated “The merger will be taken on-record after Idea furnishes required bank guarantee and gives undertaking of owning the liabilities of Vodafone India that may arise in future.”

As a prerequisite to the merger, the DoT is seeking a bank guarantee of Rs 2,100 crore on the lieu of one-time spectrum fee of Idea Cellular. The DoT will also likely take an undertaking asking that the resultant will clear dues pertaining to one-time spectrum fee and other sub-judice matter in accordance with the court’s order. The one-year bank-guarantee of Vodafone India submitted for deferred spectrum payment will be replaced by Idea Cellular. Both the companies will have to give the undertaking of clearing dues which are sub-judice as per the decision of the courts.