The collaboration of Idea and Vodafone into Vodafone-Idea Limited has been flagged off by Department of Telecommunication today. The telecom authority of Indian government on Monday favors the Idea-Vodafone tie up defining some conditions. Both cellular companies have to approve and fulfill the conditions to finalize the merge. After the merging of Vodafone India and Idea Cellular, country will get the largest mobile service operator.
Idea-Vodafone Merger: Details and Impacts
The belief of this big collaboration started in January 2017 when Aditya Birla Group owned Idea affirms that Vodafone and Idea will complete this step within two years. Idea stated to have appointing their personnel to the chairman of new telco group. Vodafone will own 45.1% in the deal while Idea will share 26%. And, the public shareholders will share the rest of 28.9% capital. The merge was expected to be completed by June 2018 which was confirmed by DoT also.
The Idea-Vodafone merger is said to dominate the spectrum in India holding 1,120Mhz spectrum across five bands. But, the TRAI rules states that no one can have more than 50% spectrum of one circle and 25% of overall spectrum. If the entity has to clear the deal, it has to stay under the TRAI limits. The department has asked Vodafone to clear the pending volume of Rs 2000 crore for favoring the deal. The actual amount was Rs 6678 crore which the company gets reduced it from appealing in Supreme Court. It was the case of 2015 when Vodafone India got its name by merging its four subsidiaries.
One report also says that if the merge completed successfully, 5000 employees would lost their job. Moreover, all the firms related to both companies who are covered in debt will take a relief from the slashing competition in the market. First condition of the government states – Idea has to pay Rs 3900 crores in cash for Vodafone spectrum. Also, it has to provide a bank guarantee of Rs 3300 crore.