Shares of Idea Cellular tanked 7.68% in intraday trade on BSE on Monday after reports indicated that the merger between Idea and Vodafone India is likely to get delayed as the department of telecommunications (DoT) is planning to raise a demand of Rs 4,700 crore as one time spectrum charges (OTSC) from Vodafone India.
The demand will be be raised under the merger and acquisition guidelines and need to be cleared before granting approval to the merger between the two companies. The shares recovered a bit to close 7.18% down, at Rs 56.20 on the BSE. The merger was earlier expected to be completed by June 30.
The DoT is likely to ask Vodafone to either clear the dues or pay a bank guarantee towards it. The DoT is likely to raise a separate demand towards OTSC from Idea Cellular amounting to around Rs 2,000 crore. Idea’s extraordinary general meeting is scheduled for Tuesday, when the company’s shareholders will vote on the name of the merged entity – Vodafone Idea. In 2015, Vodafone had merged its four subsidiaries, Vodafone East, Vodafone South, Vodafone Cellular and Vodafone Digilink with Vodafone Mobile Services which is now called Vodafone India.
DoT at that time had asked Vodafone to clear its OTSC dues amounting to around Rs 7,000 crore. However, the company challenged it in court and following a Supreme Court order for making a part-payment paid around Rs 2,000 crore while the balance was stayed. The DoT had sought a legal opinion that whether raising the balance demand from the company would amount to contempt of court and reportedly has been advised that it will not amount to any such action. As a result it is likely to raise the demand now.
In March this year, Idea and Vodafone announced Balesh Sharma, the chief operating officer at Vodafone India, as the new CEO who will be responsible for the combined business strategy, its execution and driving integration. – Financial Express