DoT awaits FDI clearance for Idea to approve merger with Vodafone

New Delhi: DoT is waiting for DIPP to give clearance for raising the foreign direct investment (FDI) limit in Idea Cellular to 100 per cent before approving the merger of Vodafone India with the Aditya Birla group firm, as per official sources.

"Only FDI clearance for Idea is pending before merger of Vodafone (India) with it. FDI limit needs to be raised in FDI for clearing both the deals of Idea -- sale of tower to ATC and Vodafone merger," a government official told PTI.

Idea Cellular has sought to raise FDI limit in the company to 100 per cent. The official added that the Department of Telecom (DoT) had approached the Department of Industrial Policy and Promotion (DIPP) for its remarks around two weeks back and waiting to hear from it.

"Both the companies (Idea and Vodafone) will be asked to clear their dues before merger is taken on record. DoT has not calculated the final amount...," the source said.

According to the standard operating procedure (SOP) for processing FDI proposals, all the ministries concerned are required to submit their comments within 4 weeks of the proposal. In absence of comments, it is presumed that ministries or departments have no comments to offer.

However, FDI clearance in telecom sector also requires approval from the Home Ministry which should be granted within six weeks. In case it is unable to provide its comment within six weeks, it needs to indicate time frame within which it will provide the comments.

The merged Idea-Vodafone entity will have highest subscriber base of 41 crore accounting for over 35 per cent market share and second largest spectrum holding of 1,850 megahertz in the country.

The merger is expected replace Bharti Airtel from its numero uno position which it has maintained in Indian telecom market with highest number of subscriber base at least since last one decade as per reports of the Telecom Regulatory Authority of India.

The debt of resultant entity is expected to be around 1.1 lakh crore as per debt situation of Idea and Vodafone India at the end of September 2017. The amalgamation will result in capex synergies, since it will eliminate the duplication of spectrum capacity and infrastructure related requirements. Idea and Vodafone are separately paying rental for 6,300 mobile sites which will be synced for merged entity within two years.