DoT to Take Legal Consultation On the Matter of Spectrum Dues from Idea Cellular

This merger being one of the largest ones in the industry has created an environment of seriousness for everyone involved, thus pushing the DoT to tread carefully. This merger is also of strategic importance to the ministry which gives all the more reason for the department to stay in the good eyes of the court. The legal pathway and the opinion have also been advised since the process is not as simple as it seems. Things have further been complicated given that Vodafone Mobile Services itself is an amalgamation of six different companies.

During the 2014-15 merger of these companies, the DoT had raised the demands for the market price of these administratively allocated spectrum and not the entry fees. Although the demands by DoT were partially met, the matter moved to court where it was stayed by the telecom tribunal. It is due to this reason that the department is now cynical about raising the demands again fearing that the move would disobey the tribunal’s order.

Presently, Vodafone Mobile services hold the administratively allocated spectrum in 13 circles, while Vodafone India does not hold any. DoT after citing the dues stayed by courts will ask Idea to pay up for the raised demands if the courts decide in the department’s favour.

Even then, the department has been on the lookout for a legal opinion whether or not it can raise the demand for the spectrum minus entry fee in case a situation occurs where Idea Cellular loses the pending case.

In the combined entity which will be called Vodafone Idea Limited, Vodafone will initially own over 45% while the Aditya Birla Group will own 26%. Although the holdings of both the companies are different, both will have equal ownership rights and, over time their shareholding will also even out. The top-level management has already been appointed ahead of the merger with Balesh Sharma taking the reins as CEO, head of finance, HR, operations and circles.