Representative Image | Vodafone Idea merger
is looking at the option of moving the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) against the Union government following a steep demand notice issued by the Department of Telecommunications (DoT) while giving a conditional clearance to its merger with Vodafone India, said a source close to the development.
“All options are open. Everything is being debated and discussed,” a source at Idea said when asked whether the company was moving court. He, however, added that any decision would now be taken in consultation with Vodafone.
Indications till now are that Vodafone may not be willing to challenge the DoT demand. Sources in Vodafone said the company would like to complete the payout to the government as its priority is to close the merger deal at the earliest.
In case Idea Cellular
decides to move court, it has to specify which demand has been contested, a DoT official said.
The DoT has asked the companies to pay Rs 39.26 billion in cash for liberalising spectrum up to 4.4 MHz assigned to Vodafone administratively. Apart from that, a bank guarantee of Rs 33.22 billion needs to be given by Idea as one-time spectrum charges (OTSC). Idea will also have to give an undertaking that it will pay all past demands made by the ministry, which are currently sub judice.
In the recent case of the Airtel-Telenor merger, the DoT’s demand of a bank guarantee was stayed for OTSC. However, the spectrum liberalisation issue did not arise in that case as Telenor had the entire auctioned spectrum.
The DoT order also specified that Idea Cellular
(ICL) would have to replace the bank guarantees towards annual installments amounting to Rs 20.05 billion, Rs 29.37 billion, and Rs 14.84 billion for spectrum bagged by Vodafone in 2014, 2015, and 2016, respectively. All demands relating to licences of the merging entities have to be cleared by either entity before taking the merger on record, the order said.
In a signal that the deal should not be delayed any further, Telecom Secretary Aruna Sundararajan
said on Wednesday that it was in the best interest of Idea and Vodafone to make the payment on the demand notice as soon as possible.
Among the other conditions in the DoT approval, it asked Idea to reduce its market share based on adjusted gross revenues in a few key states including in Haryana, Kerala, Madhya Pradesh, Maharashtra and Uttar Pradesh (West). When merged, Vodafone Idea would emerge as India’s largest telecom operator with over 43 per cent of market share.
Corporate lawyers said some of the demands made by DoT against Idea Cellular
may not clear the judicial test. “Idea will have to ultimately move the Supreme Court to get a clearance for the merger,” said a lawyer who did not want to be quoted.
DoT’s demand before Idea
Replace bank guarantees submitted by Vodafone towards annual instalments for spectrum won in 2014-2016 worth Rs 64.25 billion
Submit bank guarantees towards one-time spectrum charges worth Rs 33.22 billion
Pay Rs 39.26 billion differential price between the entry fee and the market-determined price of 4.4 MHz spectrum assigned to Vodafone on a pro-rata basis
Take responsibility for clearance of all demands against Vodafone, Idea raised by any wing of the DoT
Reduce market share in key markets to below 50 per cent