The telecom department today assured that the Airtel-Telenor deal will be approved in less than a month and asserted that clearances related to the mega-merger of Vodafone and Idea Cellular too are being expedited. Telecom Secretary Aruna Sundararajan said she did not foresee any hurdles in the clearances pertaining to the Vodafone-Idea merger (a move that would create India’s largest telecom operator dislodging Bharti Airtel from the top slot) and that it “should get done” in the timeframe of June outlined by the two companies.
Yesterday, the Supreme Court had dismissed the Department of Telecom (DoT) plea that challenged telecom tribunal order directing it to clear Airtel’s takeover of Telenor India, without insisting on bank guarantee of about Rs 1,500 crore as a pre-requisite. The move is widely perceived to have positive implications for a takeover deals in the rapidly consolidating telecom market in India.
“Very shortly. (It will take) normal processing time and it will be done,” Sundararajan said responding to a question on when the approvals from the DoT can be expected in Bharti-Telenor deal. She said the approval will come “must faster” than a month.
On whether the same applicability (bank guarantee) should also be expected for Vodafone-Idea merger, the telecom secretary declined to make a specific comment, merely saying that each case will have to be seen separately. “The Department of Industrial Policy and Promotion (DIPP) and the ministry are working closely to ensure we don’t create any bottlenecks and we go through the due diligence and expedite the clearances….at the same time, we are working with the company to ensure there are no delays from our side,” she said on the sidelines of CII Broadband Summit here.
Last month, during its results announcement, Idea Cellular had said that merger of Idea and Vodafone India is in the final leg of regulatory approvals and expected to be completed by June. Sundararajan today said that she does not anticipate any issues and that it “should get done in that timeframe”.
Commerce and Industry Minister Suresh Prabhu has told PTI in an interview earlier this month that the telecom ministry is the competent authority to take the final call on Idea Cellular’s proposal for infusing 100 per cent foreign direct investment (FDI) in the company. It was communicated to the DoT that it is the competent authority to deal with the proposal, Prabhu had said.
The FDI policy allows an overseas firm to buy up to 49 per cent stake in an Indian telecom company under automatic approval route. But the government nod is required for stake above 49 per cent. Idea and Vodafone announced last year that they would combine their operations to create the country’s largest telecom operator worth over USD 23 billion, with a 35 per cent market share.
Foreign shareholding in Idea as on March 31, 2018 stood at around 34 per cent, including 7.49 per cent in promoter group and the rest as public shareholders. British telecom multinational Vodafone Group plc is a majority shareholder in Vodafone India. Foreign shareholding in the combined Idea-Vodafone entity, therefore, would breach the automatic approval limit of 49 per cent.
According to the Idea-Voda merger announcement, Vodafone would own 45.1 per cent of the combined company after transferring a 4.9 per cent stake to Aditya Birla Group for Rs 3,900 crore in cash, concurrent with completion of the merger.
