Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors
post

Vodafone, Idea Pay Over Rs 7,000 crore to DoT for Merger

- Advertisement -

DoT had conditionally approved the merger on July 9 on the condition that Vodafone and Idea pay the debt charges to government

Idea, Vodafone India, Vodafone idea merger, Vodafone Idea merge, DoT, one-time spectrum
Image courtesy: The TeCake

Giving in to the demands of the Department of Telecommunications (DoT), Vodafone and Idea Cellular have reportedly carried out a joint payment of Rs 7,248.78 crore to the government body for merging their companies. It has also been reported that the merged entity made the payment ‘under protest’ and even has the option to challenge the dues asked by DoT in court later.

Payment made both in the form of bank guarantee and cash

- Advertisement -

According to reports, Idea Cellular has submitted Rs 3,322.44 crore of bank guarantee to DoT while Vodafone has paid Rs 3,926.34 crore in cash. While Vodafone has paid in cash towards market price for charges against holding non-auctioned waves, Kumar-Mangalam Birla owned Idea has given bank guarantee for one-time spectrum charges.

Speaking about the merger that was first announced by the telco giants in March 2017, an India spokesperson said, “Idea has submitted its compliance to the DoT’s conditional approval letter dated July 9, 2018, for the merger of Vodafone India Ltd and Vodafone Mobile Services Ltd with Idea Cellular Ltd, including the payment of Rs 3,926.34 crore (in cash) and bank guarantee of Rs 3,322.44 crore.”

DoT had given conditional approval to both the telco giants on July 9 on the condition that Rs 7,248.48 crore be paid to them regarding the charges against both the companies. Once the merger happens, the combined entity will become the largest telecom operator in India with worth US$ 23 billion business and 430 million mobile subscribers.

Vodafone to own 45.1 per cent shares in the combined entity

Once the merger is finally offered approval by DoT, Vodafone India is most likely to own 45.1 per cent of the stakes while Idea Shareholder and Aditya-Birla Group will own 28.9 and 26 per cent shares, respectively.

However, according to an agreed mechanism with the idea to equalise shares among the three companies over time, Aditya Birla can attain up to 9.5 per cent additional shares from Vodafone India. In fact, in four years, if Vodafone India still owns more shares than Aditya-Birla and Idea Shareholder, the former must sell down its shares to abide by the rule that both the telecom companies must have equal stakes in the combined entity.  The shareholding is required to be equalised over the next five-year period.

Till shares are equal between both the companies, Vodafone will be restricted to their voting rights of the additional shares and voting will instead be conducted jointly under the terms of the shareholders’ agreement.

Three big players in the telecom space

Debt-ridden Vodafone and Idea have been facing competition from Reliance Jio and India’s largest telecom operator Bharti Airtel. Both Jio and Airtel have gained customers’ trust due to their 4G services, which have been a downside for both Vodafone and Idea. After the merger, the 4G spectrum of both the companies can offer up to 450 megabits per second broadband speed on mobile phones across 12 Indian industries, a presentation by Idea Cellular had stated.

Sanjay Bhasin, executive vice president, markets and corporate affairs at India Infoline Finance Limited (IIFL) believes that the payment made by Vodafone and Idea to DoT will make sure that the merger finally happens. He added: “It will have its own economies of scale, it will have a lot of tax benefits, claim much more depreciation, so the accounting positives will come in. Given that (Idea) stock was trading at an all-time low of Rs 50, this will be a shot in the arm in the near term.”

Speaking about the competition among Airtel who will lose its top position as the largest telecom in the country once the merger goes through, Reliance Jio and Vodafone-Idea, Bhasin said: “Now it will be a three-pronged attack with Jio, Airtel and Idea-Voda, where all three are capable of raising money. So, overall, the worst may be over and overtime as prices stabilise, you could see Idea-Vodafone also report better average revenue per user (ARPU) and profitability in the next three to six quarters. There is enough room for all three to survive. At Rs 350 for Bharti Airtel and Rs 50 for Idea, all the negatives have been priced in.”

Once the merger is finally cleared by DoT, Kumar Mangalam Birla will become the new non-executive chairman of the combined entity while Balesh Sharma will hold the position of the new chief executive officer (CEO). Akshaya Moondra, the financial officer of Idea will lead the financial operations of the merged company as its chief financial officer (CFO). The current deputy MD of Idea, Ambrish Jain will become the new chief operating officer (COO)

- Advertisement -

Most Popular Articles

Automotive car sensor

ISRO Chairman Urges Association With Automotive Industry To Produce Sensors Locally

0
The space research organization is making significant strides in creating indigenous car sensors to empower the automotive industry. At the Bangalore Tech Summit on November...

U.S. Approves $1.5B Subsidy For GlobalFoundries Expansion

0
Winning the $1.5 billion US government subsidy, GlobalFoundries is looking to power industries like automotive, IoT, and defence with advanced chip manufacturing in New...

Trump’s Tariff Plan Could Derange Electronics Pricing

0
From disrupting global semiconductor supply chain to inflating iPhone prices, what can Donald Trump's proposed tariff raise on Chinese imports can cause? Donald Trump,...
Chip Manifacturing-NIvidia

New Blackwell Chip Will Propel Nvidia’s Unprecedented Market Growth In Coming Years

0
These chips have effectively dispelled concerns regarding potential pullbacks from tech giants investing heavily in AI processing and data centers. The global AI backed fabless...

David Goeckeler Appointed Chair Of SIA Board

0
Bringing 40 years of tech experience to lead the global semiconductor industry, David Goeckeler, CEO of Western Digital, joins to lead the SIA Board...
Abhishek Malik from Calcom Vision Limited

“India’s Electronics Sector Is Growing Rapidly, Making This The Decade For Investors To Engage”...

0
From the complexities of manufacturing and sourcing components to testing processes that drive innovation, know all the exciting dynamics shaping this ever-evolving industry in...
Sunit Kapur, CEO of Epsilon

“Epsilon Leads With Low-Carbon Graphite Manufacturing, Outpaces Chinese Competitors” – Sunit Kapur, CEO of...

0
Are LFP cathodes and silicon-graphite anodes the best for cost efficiency in EV batteries? Sunit Kapur, CEO of Epsilon Advanced Materials, discusses this with...
John W. Mitchell, President and CEO, IPC

“India’s Core Focus On 5G, IoT, AI Fosters Need For Advanced Electronics,Components, And Semiconductors”...

0
Will Industry 4.0 supercharge India’s progress in semiconductor and electronics manufacturing? IPC President and CEO John W. Mitchell shared more strategies on the country’s...
Raman M., Co-Founder and CEO, chargeMOD

“Our Goal Is To Achieve Complete Sustainability By 2025-2026” – Raman M. Of chargeMOD

0
In a conversation with Nitisha Dubey from EFY, Raman M. of chargeMOD, elaborated his goal of developing virtual power plants by decentralising power production. Q....

“Adoption Of IoT-Enabled SMT Machines Is Still In Early Phases” – Pradeep Tandon, Director...

0
While electronics are becoming smarter through the Internet of Things, is electronics manufacturing following suit? Pradeep Tandon, Director for India, Middle East, and SAARC...
Applied Materials Representational Image

Applied Materials Selects Six Startups For Deep-Tech Accelerator Programme

0
The selected deep-tech startups will be evaluated for investment by Applied Ventures and potential collaboration opportunities with Applied Materials. In collaboration with the company's India...

Space tech Startup Akash Secures $68M CHIPS Funding

0
Eyeing to power into AI, EVs, and more high-tech industries, Akash Systems lands $68 million CHIPS grant to boost its cooling tech facility, generating...

Wireless Light-Based Communication With Velmenni’s Technology

0
Velmenni is at the forefront of wireless communication innovation with its pioneering light-based technologies, Li-Fi and LC Link. Founded by Deepak Solanki in October 2014...

Harnessing AI Technology For Efficient Pest Management

0
AI-Genix, an agri-tech startup, is transforming pest management for farmers through advanced AI-enabled systems that precisely target harmful pests. In an industry where pesticides and...

One Charger To Charge All Your Devices

0
Now, there is no need to carry different chargers for different products. This Bhubaneswar startup has launched a universal 65W charger using GaN technology...

Industry's Buzz

Automotive car sensor

ISRO Chairman Urges Association With Automotive Industry To Produce Sensors Locally

0
The space research organization is making significant strides in creating indigenous car sensors to empower the automotive industry. At the Bangalore Tech Summit on November...

U.S. Approves $1.5B Subsidy For GlobalFoundries Expansion

0
Winning the $1.5 billion US government subsidy, GlobalFoundries is looking to power industries like automotive, IoT, and defence with advanced chip manufacturing in New...

Trump’s Tariff Plan Could Derange Electronics Pricing

0
From disrupting global semiconductor supply chain to inflating iPhone prices, what can Donald Trump's proposed tariff raise on Chinese imports can cause? Donald Trump,...
Chip Manifacturing-NIvidia

New Blackwell Chip Will Propel Nvidia’s Unprecedented Market Growth In Coming Years

0
These chips have effectively dispelled concerns regarding potential pullbacks from tech giants investing heavily in AI processing and data centers. The global AI backed fabless...

David Goeckeler Appointed Chair Of SIA Board

0
Bringing 40 years of tech experience to lead the global semiconductor industry, David Goeckeler, CEO of Western Digital, joins to lead the SIA Board...

Learn From Leaders

Abhishek Malik from Calcom Vision Limited

“India’s Electronics Sector Is Growing Rapidly, Making This The Decade For Investors To Engage”...

0
From the complexities of manufacturing and sourcing components to testing processes that drive innovation, know all the exciting dynamics shaping this ever-evolving industry in...
Sunit Kapur, CEO of Epsilon

“Epsilon Leads With Low-Carbon Graphite Manufacturing, Outpaces Chinese Competitors” – Sunit Kapur, CEO of...

0
Are LFP cathodes and silicon-graphite anodes the best for cost efficiency in EV batteries? Sunit Kapur, CEO of Epsilon Advanced Materials, discusses this with...
John W. Mitchell, President and CEO, IPC

“India’s Core Focus On 5G, IoT, AI Fosters Need For Advanced Electronics,Components, And Semiconductors”...

0
Will Industry 4.0 supercharge India’s progress in semiconductor and electronics manufacturing? IPC President and CEO John W. Mitchell shared more strategies on the country’s...
Raman M., Co-Founder and CEO, chargeMOD

“Our Goal Is To Achieve Complete Sustainability By 2025-2026” – Raman M. Of chargeMOD

0
In a conversation with Nitisha Dubey from EFY, Raman M. of chargeMOD, elaborated his goal of developing virtual power plants by decentralising power production. Q....

“Adoption Of IoT-Enabled SMT Machines Is Still In Early Phases” – Pradeep Tandon, Director...

0
While electronics are becoming smarter through the Internet of Things, is electronics manufacturing following suit? Pradeep Tandon, Director for India, Middle East, and SAARC...

Startups

Applied Materials Representational Image

Applied Materials Selects Six Startups For Deep-Tech Accelerator Programme

0
The selected deep-tech startups will be evaluated for investment by Applied Ventures and potential collaboration opportunities with Applied Materials. In collaboration with the company's India...

Space tech Startup Akash Secures $68M CHIPS Funding

0
Eyeing to power into AI, EVs, and more high-tech industries, Akash Systems lands $68 million CHIPS grant to boost its cooling tech facility, generating...

Wireless Light-Based Communication With Velmenni’s Technology

0
Velmenni is at the forefront of wireless communication innovation with its pioneering light-based technologies, Li-Fi and LC Link. Founded by Deepak Solanki in October 2014...

Harnessing AI Technology For Efficient Pest Management

0
AI-Genix, an agri-tech startup, is transforming pest management for farmers through advanced AI-enabled systems that precisely target harmful pests. In an industry where pesticides and...

One Charger To Charge All Your Devices

0
Now, there is no need to carry different chargers for different products. This Bhubaneswar startup has launched a universal 65W charger using GaN technology...