The Department of Telecommunications (DoT) has sought the opinion of the Additional Solicitor-General (ASG) on the merger of Vodafone India and Idea Cellular, with the licensor seeking the legal tenability of raising a fresh demand on the latter.
Vodafone and Idea are awaiting regulatory approvals to create the country’s largest telecom company with a user base of 430 million.
DoT has sought legal opinion on raising a fresh demand for the differential between the entry fee and the market-determined price of the 4.4 MHz of spectrum administratively allocated to Vodafone. Generally, such demands are raised on a pro-rata basis for the remaining period of the licences, sources close to the development told BusinessLine .
Under current merger and acquisition (M&A) guidelines, for the spectrum held by the acquired entity, the acquirer has to pay the differential between the market-determined price and the entry fee, they added.
The proposal for merger of Vodafone India Ltd (VIL), Vodafone Mobile Services Ltd (VMSL) and Idea Cellular Ltd (ICL) was sanctioned by the Ahmedabad bench of the National Company Law Tribunal on January 1, and its Mumbai bench on January 19, 2018.
Following the approvals, Vodafone had sought DoT approvals to transfer its telecom licenses, authorisations and spectrum, among others, to Idea Cellular. As of January 19 (NCLT’s approval date), VMSL held administratively allocated spectrum in 13 circles, while VIL did not have any.
The legal opinion is being asked as DoT had earlier sought a total of about ₹6,700 crore from VMSL for the 4.4 MHz spectrum allocated to Vodafone Group in 2015. However, these demands are under litigation before the Telecom Disputes Appellate Tribunal (TDSAT), even as VMSL has already footed ₹2,000 crore, a part of the total demand, they added.
DoT is ensuring that all rules are followed, and the approval for the merger might come in before Idea Cellular’s extraordinary general meeting on June 26.
The EGM has been called to change the merged company’s name to ‘Vodafone Idea’ and to discuss raising of Rs 15,000 crore through Non-Convertible Debentures (NCDs).
Last month, telecom secretary Aruna Sundararajan said that the clearances for the merger are being expedited and should be done in the June timeframe set by the two companies.