Vodafone CEO Vittorio Colao meets Telecom Secretary

Vodafone and Idea are required to sort out excess spectrum holding and market share issues to complete merger.

Update: 2017-03-01 05:45 GMT
TRAI has recommended imposition of a fine of Rs. 50 crores for each of the 21 circles of Vodafone.

Barcelona: Vodafone Group Chief Executive officer Vittorio Colao today met Telecom Secretary J S Deepak here amidst merger talks of Vodafone India and Idea Cellular.

"An half an hour meeting was held between J S Deepak and Colao at Vodafone set up at Mobile World Congress," a source said.

When contacted, both Deepak and Colao did not offer any comment. Vodafone Group is in talks to merge its Indian unit with Idea Cellular in an all-share deal to create the country's largest telecom operator.

The joint entity -- with around 387 million users -- will not only topple Bharti Airtel from the numero uno position but will also fiercely compete with Reliance Jio that has unleashed a price war in the indian market.

Vodafone and Aditya Birla group are required to sort out excess spectrum holding and market share issues to complete merger. The government, at present, offers no refund for surrendering excess spectrum, which leaves both Vodafone and Idea with the option of either to sell excess spectrum or surrender it to the government at loss.

The combined entity as per present scenario will breach spectrum cap in 900 Mhz band in Maharashtra, Gujarat, Kerala, Haryana and UP West and in 2500 Mhz band in Maharashtra and Gujarat.

Brokerage firm CLSA estimates that the excess spectrum that would need to be surrendered or sold off is valued around Rs 5,400 crore and for the merger, both the companies will also have to shell out Rs 5,700 crore for liberalising radiowaves that they were allocated administratively.

The proposed merger of Vodafone India and Idea will create an entity with a revenue of around Rs 77,500-80,000 crore besides eliminating duplication of spectrum and infrastructure capex, the agency had said in its report.

Further, the spectrum of Vodafone India in seven circles and that of Idea in two, whose permits are expiring in 2021-22, is together valued at around Rs 12,000 crore as per last auction price.

These permits are not in common circles, and hence there could be potential spectrum capex synergies between the two companies, the report said.  

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