The Prime Minister's Office (PMO) has sought details of the merger between Idea Teleservices and Vodafone from the Department of Telecom(DoT).
The deal which has been the talk of the town for months now, has been stuck with the DoT seeking additional clarifications on due diligence and compliance.
The deal was expected to be cleared by mid-June this year, but is yet to see the light of the day.
DoT officials claimed that the PMO was appraised in-person on the due diligence and the issues at hand. According to sources in the know, the DoT has been seeking legal opinions on the merger and the clarification on OTSC charges.
The DoT wants to clarify its stand on legal areas such as clearances of One-Time spectrum charges for Idea and Vodafone.
Vodafone paid Rs 2450 crores of the Rs 8100 crores as OTSC charges, raised by the DoT. The pending is subject to a case being heard in a telecom tribunal. Also, as per merger and acquisition (M&A) guidelines, for spectrum holdings of acquired entity, acquirer has to pay differential between the market determined price and the entry fee. Such payments have to be made for 4.4 MHz of spectrum on a pro-rata basis for the remaining period of licence validity and DoT raised such demands to Vodafone at the time of the merger of Vodafone group companies in 2015, sources said.
Vodafone had challenged these demands with the Telecom Disputes Settlement and Appellate Tribunal (TDSAT), but part of the demand had been paid on the directions of a Supreme Court directive. Industry sources said the issue now is that, with Vodafone being acquired by Idea, whether DoT should raise the demand on Idea Cellular of the differential amount.
The DoT is seeking legal opinion on whether a fresh demand can be raised on Idea for the differential amount between the market determined price and the entry fee paid for 4.4 MHz of administratively allocated spectrum of Vodafone. It is also seeking legal opinion on whether this would be willful disobedience of the court.
Last month, Manoj Sinha, the Telecom minister was quoted in a report claiming that the government was not delaying the merger. "Every merger and acquisition needs to follow a set of rules and regulations. Once DoT completes all statutory formalities, Vodafone-Idea merger will be cleared immediately," the Minister said.
An unnamed government official was reported as saying that a query from the PMO may be viewed as a gentle nudge to expedite the process. A faster approval to this deal could be viewed as an example of ease of doing business.
An official ratification for the merger is key to the business of Vodafone and Idea, that have been operating in a business disrupted after the entry of Reliance Jio. With Jio itself announcing a set of newer products and services, during the recently concluded 41st AGM of Reliance Industries Limited , incumbent players may have to do more than just offer competing services.
Amid the need to ensure the merger is completed, the DoT is keen to complete legal processes and due diligence, to the extent of utilizing all legal opinions before offering a green signal to this merger.