British telecom major Vodafone Group welcomed the government’s conditional clearance to Vodafone India’s merger with Idea Cellular and said the company is upbeat about the Indian market and will remain invested here.
Under the conditional merger approval, the telecom department has demanded Rs 7,268 crore upfront payment towards dues it said the two telcos owe it. It is split between a bank guarantee of Rs 3,342 crore on account of one-time spectrum charges claimed from Idea and a cash payment of Rs 3,926 crore towards market price for non-auctioned airwaves held by Vodafone.
Idea’s shares climbed 2.11% to close at Rs 55.70 on BSE on Tuesday, on hopes the Kumar Mangalam Birla–led company, when combined with Vodafone, will be far stronger and competitive.
Experts said, the merged entity will fall short of the $10-billion projected savings by way of cost/capex synergies since the ground realities of the telecom market have changed following sustained price wars over the past 15 months, which has eroded average revenue per user (ARPUs) and operating incomes (Ebitda) at both telcos.