The Department of Telecommunications is now on the lookout for a legal opinion on the Idea Cellular and Vodafone India merger in respect to Vodafone’s administratively allocated spectrum holdings, an industry insider said to IANS. The merger and acquisition (M&A) guidelines dictate that for such spectrum holdings of the acquired entity, it is the acquirer’s responsibility to pay the differential between the market determined price and the entry fee. The report also added that payments like these would have to be made for 4.4 MHz of spectrum on a pro-rata basis which would extend till the date of licence validity. They also said that this isn’t the first time that a similar demand has been raised, the department had also raised such demands to Vodafone in 2015, during the time of the merger of Vodafone group companies.
However, Vodafone had moved the court to the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) after the demand was raised, but part of the demand (Rs 2,000 crore out of the Rs 6,700 crore) had been paid on the directions of the Supreme Court.
As per the department’s statement, now the issue with Vodafone being acquired by Idea is that the DoT is still stuck on the decision whether or not a demand should be raised on Idea Cellular for the differential amount.
The legal opinion which the department is seeking is also related to the same issue, “whether a fresh demand can be raised on Idea for the differential amount between the market determined price and the entry fee paid for 4.4 MHz of the administratively allocated spectrum of Vodafone”.
The DoT is also ambivalent about whether or not this demand would be considered willful disobedience of the court. Both the telcos are expecting the approval from DoT and it was said that DoT would be approving the merger with a conditional nod from Idea Cellular seeking Rs 2,200 crore bank guarantee.