Vodafone, which provides mobile services across the 22 circles, holds licences through different subsidiary firms: Vodafone East, Vodafone South, Vodafone Cellular and Vodafone Digilink. (Photo: Reuters)
The Supreme Court on Monday asked Vodafone to make an interim payment of Rs 2,000 crore to the department of telecommunications, following which the latter will approve the merger of its four subsidiaries into Vodafone India. Whether the company needs to pay more — Rs 6,678 as demanded by DoT for the merger process — will in the meantime be determined by the Telecom Disputes Settlement and Appellate Tribunal.
Vodafone, which provides mobile services across the 22 circles, holds licences through different subsidiary firms: Vodafone East, Vodafone South, Vodafone Cellular and Vodafone Digilink. It needs to merge them into a single company as it is planning to come out with an initial public offering for which it has started preparations. Further, its licence for the Tamil Nadu circle is expiring next month but that of Chennai is valid till 2021. Through the merger the two licences would become one and the latter validity would apply.
The merger has been approved by the respective high courts but the DoT has still not approved it because it treats it under its merger and acquisition norms for which the company needs to pay for spectrum charges as per auction-determined rates in addition to the one-time charges for spectrum in excess of 4.4 MHz.
The DoT had issued a demand notice of Rs 6,678 to the company, which the latter challenged in the TDSAT. While the telecom tribunal has not given its final verdict in the case, it asked the DoT to approve the merger while it hears the matter. This was challenged by the DoT in the Supreme Court. Since Vodafone had offered to pay Rs 1,773 crore subject to its claim being accepted by the DoT by March 9, 2015, and further without prejudice to their rights, the SC on Monday asked it pay a round figure of Rs 2,000 crore.
Taking a call:
* Vodafone India had applied for merger of its subsidiary companies into it
* It offers services across 22 circles through different subsidiary firms
* Merger will help it in coming out with an IPO
* DoT wants company to pay one-time spectrum charge and market-determined price for spectrum held
* SC order has paved way for merger and, hence, IPO