New Delhi: The department of telecom (DoT) will seek Rs 2,100 crore bank guarantee this month from Idea Cellular as one-time spectrum charge before its union with Vodafone is cleared, as per the latest M&A guidelines.
As per the amended M&A guidelines, the spectrum cap has been hiked and Vodafone and Idea are not required to give undertaking to surrender additional spectrum after merger.
Revised guidelines say only company that is making the acquisition (Idea) will have to give the bank guarantee and an undertaking that it will pay all dues for which legal cases are pending, depending on the outcome of cases.
Vodafone and Idea had announced that the merger would be complete by June.
Vodafone is fighting the OTSC (one-time spectrum charges) case in courts for merger of its seven subsidiaries earlier with the Supreme Court issuing a stay in the matter. Now onwards, Vodafone would be represented by Idea.
Vodafone India’s OTSC dues are about Rs 3,700 crore and that of Idea Rs 2,100 crore. Officials said only Idea would now have to produce a bank guarantee for the Rs 2,100 crore OTSC prior to approval for merger.
The amended telecom licence norms remove limitation on telecom operator of holding more than 50 per cent in a spectrum band above 1,000 Mhz frequency used for transmitting mobile signals. Telecom operator is now allowed to hold up to 35 per cent of total spectrum allocated in a service area. The earlier limit was 25 per cent.
“The total spectrum held by the resultant entity shall not exceed 35 per cent of the total spectrum assigned for access, by way of auction or otherwise, in the service area concerned,” the licence amendment said.
But a mobile operator cannot hold more than 50 per cent radio waves in a service area in premium bands below 1 Ghz – 700 Mhz, 800 Mhz and 900 Mhz band.
The new norms allow telecom operators to hold two blocks of 3G spectrum that were auctioned in 2010 as result of merger or any other permissible arrangement among the companies.
The move facilitates merger of Idea and Vodafone whose combined holding, as per analysts, was breaching the spectrum cap in 900 Mhz band across 5 telecom circles – Maharashtra, Gujarat, Kerala, Haryana and UP West – under old rules. Reliance Jio’s purchase of RCom spectrum was also beyond limits.