Investors in Vodafone Plc have sought clarity from the UK based telecom group on the valuation of their deal with Idea Cellular. According to a news report by CNBC, the investors had also asked Vodafone to play an active role in India than a passive one.
The group said it will not be commenting on the same. According to the report, the investors are happy since it would lead in cash infusion and debt reduction. Vodafone and Idea are in talks for an equal merger to combine spectrum assets, strengthen balance sheets and reduce cost and capex to compete effectively.
UK’s Vodafone Group and the Aditya Birla Group had on January 30 said they were in talks to merge Vodafone India, excluding its stake in Indus Towers, and Idea in an all-share deal that would create the country’s biggest mobile phone company by subscribers and revenue market share.
Vodafone Group CEO Vittorio Colao had said the merger talks are aimed at creating a self-funded Indian JV with equal rights to take on Reliance Jio Infocomm, led by India’s richest man, Mukesh Ambani.
If India’s second and third-largest telcos do merge, the resultant entity would need to surrender a significant excess spectrum under the current rules. A telecom operator can only hold a maximum 25% of the total spectrum allotted/issued in a circle and up to 50% of the airwaves allotted in any a band.
According to a Credit Suisse note dated February 9, the merged entity would breach the spectrum cap in five circles in the coveted 900 MHz band and in 2 circles in the 2500 MHz band. As a result, it would need to dispose off excess airwaves worth Rs 7,600 crore to meet permissible spectrum limits.
In a separate development, the telecom regulator said it would look into the proposed Vodafone and Idea merger “as and when” regulatory issues crop up.
“That’s (read: proposed merger of Idea and Vodafone India) a business decision. I would not like to comment. As and when there is regulatory issue, I will certainly give advise to the government,” R S Sharma, Chairman, Telecom Regulatory Authority of India (Trai) said on the sidelines of Momentum Jharkhand on Friday.
The group said it will not be commenting on the same. According to the report, the investors are happy since it would lead in cash infusion and debt reduction. Vodafone and Idea are in talks for an equal merger to combine spectrum assets, strengthen balance sheets and reduce cost and capex to compete effectively.
UK’s Vodafone Group and the Aditya Birla Group had on January 30 said they were in talks to merge Vodafone India, excluding its stake in Indus Towers, and Idea in an all-share deal that would create the country’s biggest mobile phone company by subscribers and revenue market share.
Vodafone Group CEO Vittorio Colao had said the merger talks are aimed at creating a self-funded Indian JV with equal rights to take on Reliance Jio Infocomm, led by India’s richest man, Mukesh Ambani.
If India’s second and third-largest telcos do merge, the resultant entity would need to surrender a significant excess spectrum under the current rules. A telecom operator can only hold a maximum 25% of the total spectrum allotted/issued in a circle and up to 50% of the airwaves allotted in any a band.
According to a Credit Suisse note dated February 9, the merged entity would breach the spectrum cap in five circles in the coveted 900 MHz band and in 2 circles in the 2500 MHz band. As a result, it would need to dispose off excess airwaves worth Rs 7,600 crore to meet permissible spectrum limits.
In a separate development, the telecom regulator said it would look into the proposed Vodafone and Idea merger “as and when” regulatory issues crop up.
“That’s (read: proposed merger of Idea and Vodafone India) a business decision. I would not like to comment. As and when there is regulatory issue, I will certainly give advise to the government,” R S Sharma, Chairman, Telecom Regulatory Authority of India (Trai) said on the sidelines of Momentum Jharkhand on Friday.
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