India’s Department of Telecommunications (DoT) is mulling a demand for INR47 billion ($690 million) in back-dated spectrum charges before clearing Vodafone India’s merger with Idea Cellular, The Economic Times (ET) reported.
The fee casts doubt on the companies’ ability to complete the deal by a dealine of 30 June. It relates to charges levied in 2015 during the merger of Vodafone’s five India-based business units into one company.
At the time the DoT demanded around INR67 billion for charges related to spectrum, in addition to other regulatory costs, which led to a protracted legal battle.
Eventually the Supreme Court ordered Vodafone should pay INR20 billion as an interim payment to get the deal through. At the time, the remainder was said to be subject to further court action as the DoT reserved the right to challenge the fee.
No further payments were agreed and now the DoT, after legal consultation, believes it can recover the remainder before clearing the merger with Idea Cellular, ET reported.
In addition to the fee from Vodafone, the DoT is also tipped to be preparing a separate demand for INR21 billion in bank guarantees from Idea Cellular for costs related to its spectrum licences.
The country’s other authorities waved the Idea Cellular-Vodafone merger through separately over the last 12 months. Last week, clearance from the DoT was said to be “imminent”, however the latest hurdle looks set to leave the parties struggling to meet the 30 June deadline originally set out for the transaction.
Once complete, the tie-up between the second and third largest operators in India will create a new market leader by connection numbers. Both operators have made lengthy preparations ahead of anticipated approval including the sale of towers and, in Idea Cellular’s case, fundraising measures.