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Department of Telecom rejects recalculation of dues requests by Idea and Vodafone

Both the companies need to pay the dues so that they can receive the final “seal of approval” on their merger from the Department of Telecommunications.

  • Published: July 18, 2018 12:15 PM IST
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The Department of Telecommunications (DoT) has rejected the requests by two major telecom players, Vodafone India and Idea Cellular about recalculating their dues. DoT went on to add that the calculation done by the department does not have any issues and that both the companies need to pay so that they can receive the final “seal of approval” on their merger as reported by The Economic Times. As per the report, DoT official pointed out that the department is seeking out “bank guarantees and cash payment”.

As previously reported, the department had demanded Rs 7,268 crores as an “upfront payment”. The demand for upfront payment by DoT is because of the dues that both telecom operators owe the department. The report pointed out that Vodafone India owes Rs 3,926 crore as the market price “for non-auctioned airwaves” that are held by the company while Rs 3,342 crore as the “one-time spectrum charges” are held by Idea Cellular. As pointed out in the report, this comes after Idea and Vodafone India “flagged some discrepancies” in the calculated amount and asked the department to check again.

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The report also goes on to point that according to DoT, “it is up to” the companies if they want to challenge the dues or “pay up immediately”. It is likely that Idea Cellular is planning to challenge the dues in court. However, DoT pointed out that is prepared to fight the companies in court to enforce the rules.

If any of the two telecom operators decide to go to the court to challenge the DoT then it is likely to delay the completion of the merger of both the companies. Both the companies have already crossed the June deadline to complete the merger. According to the conditions set, Idea needs to replace the bank guarantees of Vodafone amounting up to Rs 6,452 crore and be responsible for paying the one-time spectrum charges that Vodafone India currently owes.

The report also pointed out that both the companies need to complete the merger as quickly as possible as it has held up critical infrastructure and capital worth about $10 billion that the combined Vodafone Idea would need “to stay competitive on the 4G front”.

  • Published Date: July 18, 2018 12:15 PM IST