Telecom Ministry to Take a Final Decision on Idea Cellular’s 100% FDI Proposal

To give our readers an idea about how the Idea shareholding looks like in the current scenario – The foreign stakeholders hold about 34% including 7.49% in the promoters group and the rest are public shareholders. As for Vodafone India, the British telecom company Vodafone Group plc is a major stakeholder in the company. Therefore, when Vodafone and Idea will merge the foreign shareholding would breach the 49% approval limit. In this situation, it becomes essential that the company sought approval from the government.

As per the official announcement which broke the news of the merger, in the newly merged entity of both the companies, Vodafone will own 45.1% of the total company post paying for the 4.9% stake to Aditya Birla Group for Rs 3,900 crores in cash. After the Telecom Department added an additional condition to the proposal of FDI, the matter was forwarded to DIPP. Since the abolition of foreign investment promotion board (FIPB), the departments and ministries of 11 sectors, including telecom and print media, become the competent authorities for approval of FDI proposals unless there are some additions or rejection to make in the proposal being discussed.

Since similar situations are in sight for Idea Cellular, the company would have to move ahead with the matter to DIPP. It is noteworthy that the merged Idea-Vodafone entity will have a subscriber base of 41 crore accounting for 35% of market share. This new company would also own the largest spectrum holding of 1,850 MHz in the country.

After the merger, the combined company is also said to have a debt of 1.1 trillion as calculated according to debt situations of Idea and Vodafone in the month of September 2017.