The Department of Telecommunications (DoT) on Thursday gave its final approval for the merger between Vodafone India Ltd and Idea Cellular Ltd. Leading up to it, the two companies have collectively paid approximately Rs 7,300 crore as one-time spectrum charges to DoT in order to merge their mobile business. Following this, they will be approaching the Registrar of Companies (RoC) for completing the final process of registering the joint entity.
The new entity is suggested to be called as Vodafone Idea Ltd, and it will be creating India’s largest telecom firm by subscribers, overtaking the current leader Bharti Airtel. The joint venture will help the two firms compete better with Mukesh Ambani-led Reliance Jio, which disrupted the cellular market space by offering free calling and low data tariff plans.
Livemint reported that out of the 7,300 crore fee, Rs 3,900 crore is being utilized to transfer off spectrum from Vodafone to Idea for a spectrum of 4.4MHz. The rest of the fee is said to be kept aside for Idea Cellular’s airwaves, which is beyond the 4.4MHz.
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In the new combined entity, Vodafone is said to own a 45.1 percent stake, while Aditya Birla Group and Idea shareholders are said to own 26 percent and 28.9 percent respectively. The companies have already appointed a leadership team that will run the merged entity. Kumar Mangalam Birla, Chairman of Aditya Birla Group will be operating as the non-executive chairman of the company, while Balesh Sharma who is the chief operating officer of Vodafone will be chief executive officer. The financial operations of the new company will be undertaken by Idea Cellular’s CFO Akshaya Moondra.