DoT moves ASG again, seeking legal opinion on Idea-Voda merger

Rajesh Kurup Mumbai | Updated on July 08, 2018 Published on July 08, 2018

Seeks clarification on payment of administratively-held spectrum and M&A guidelines

In a move that might further delay the merger between Vodafone India and Idea Cellular, the Department of Telecommunications (DoT) has once again sought the opinion of the Additional Solicitor-General (ASG) on payment of administratively-held spectrum and clarity on guidelines related to mergers and acquisitions.

Administratively-allocated spectrum pertains to radio waves given to an operator outside the auction process. Prior to 2010, spectrum was given on a subscriber-linked criteria. Post 2010, all airwaves have been allocated through an auction process, thereby creating a difference in pricing.

This is the second time that the licensor is seeking the ASG’s approval for the impending merger.

Clarifications on merger

In the latest move, the department has sought clarifications on whether the demand for the differential between the initial fee and the market-determined price of administratively-allocated spectrum held by Vodafone is to be raised, in respect of the amalgamation of its subsidiaries in 2014-15, or in connection with the proposed merger with Idea Cellular.

According to the licensor, Vodafone India merging four of its units — Vodafone East, Vodafone South, Vodafone Cellular and Vodafone Digilink with Vodafone Mobile Services in 2014-15 — should be considered the first merger. The proposed merger with Idea should be considered the second merger, sources close to the development told BusinessLine.

Further, DoT has also sought clarification on whether it should raise the demand for the total administratively-allocated spectrum, or for the up to 4.4 MHz held by Vodafone.

DoT has also asked the ASG if bank guarantees from Idea should be for its entire spectrum, on a one-time spectrum charges (OTSC) basis, or only for radio waves beyond 4.4 MHz.

Idea Cellular, an Aditya Birla Group company, held administrative spectrum across Mumbai, Delhi, Rajasthan, Uttar Pradesh (East), Bihar and Himachal Pradesh circles as on January 19, 2018.

When Vodafone units were merged with itself (the first merger, according to DoT), the licensor had sought ₹6,678 core as OTSC dues, which was challenged by the operator in court. Following a Supreme Court order, Vodafone paid ₹2,000 crore for the deal.

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Published on July 08, 2018
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