India’s Department of Telecommunications (DoT) is withholding its final approval of Vodafone India and Idea Cellular’s merger until the companies pay a total of INR71.7 billion ($1.04 billion) in spectrum fees.
This amount exceeds the INR47 billion in back-dated spectrum charges that the DoT was reportedly planning to charge Vodafone. The fees went unpaid following Vodafone’s 2015 merger of its Indian units, with reports at the end of June suggesting that the DoT might demand payment as a condition for approving the merger.
Despite the sum being higher than expected, the DoT is actually asking for slightly less than anticipated from Vodafone India – INR39 billion in cash. Idea Cellular was originally being asked to provide a bank guarantee of INR21 billion – this figure has risen to INR33 billion, hence the higher total.
Speaking anonymously, a DoT official told the Economic Times: “Once the companies pay up, the department will begin the transfer of Vodafone India’s licences and Vodafone Mobile Services Ltd.’s licences to Idea Cellular, which will complete the merger.”
The paper reported that at the very least, the operators were likely to appeal against the Idea bank guarantee, as India’s Supreme Court dismissed a similar charge made against Bharti Airtel as a condition for approving its acquisition of Telenor India.
Vodafone and Idea had been aiming to close the deal by 30th June, and any legal challenge will further delay its conclusion. The merger, which will see the emergence of a new market leader by connections, has been approved by all other required authorities.
