Idea Cellular to bear Vodafone India liabilities worth Rs 13,600cr before final DoT merger approval

13 July, 2018 8:39 AM

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Idea Cellular to bear Vodafone India liabilities worth Rs 13,600cr before final DoT merger approval

The Department of Telecommunications (DoT) requires Idea Cellular to provide bank guarantees and payments for the spectrum bought by Vodafone India before final approval for their merger is granted.

According to a BloombergQuint report, Idea Cellular is expected to pay close to Rs 13,600 crore in the form of payments and bank guarantees.

There will also be a lock-in of shares that Vodafone India owns in Idea Cellular.

The resultant entity is to reduce its market share based on the basis of its subscriber base in Gujarat, Haryana, Kerala, Madhya Pradesh and Uttar Pradesh (West) within a year of approval.

The merged entity will also have to bring down its market share to under 50 percent in Kerala, Maharashtra and Gujarat, on the basis of their adjusted gross revenue, within one year from the date of approval.

Other conditions include submission of bank guarantees worth Rs 3,322 crore for one-time spectrum charges. Idea Cellular will also have to replace bank guarantees provided for spectrum won by Vodafone India in 2014, 2015 and 2016 to the tune of Rs 2,005 crore, Rs 2,937 crore and Rs 1,484 crore respectively.

It also needs to pay a sum of Rs 3,926 crore as the difference between the entry fee paid and the market price of 4.4 megahertz spectrum that was awarded to Vodafone India on a pro rata basis.

Idea Cellular will also have to take the responsibility of clearing any of the demands put up by the DoT, including payments that are subject to the judicial process.

Source: moneycontrol.com

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