Idea Cellular’s proposed merger with Vodafone India moved a step closer after both the Reserve Bank of India (RBI) and the Department of Industrial Policy and Promotion (DIPP) did not object to Idea increasing its foreign direct investment (FDI), The Economic Times (ET) reported.
Once Idea is cleared by the Department of Telecommunications (DoT) to increase its FDI, the two companies can request the department to transfer Vodafone’s licence to Idea for final approval of the merger that would create India’s largest operator by revenue and subscribers, the newspaper said.
Although RBI did not find any violation of the Foreign Exchange Management Act (FEMA) in the planned merger, DIPP asked DoT to obtain clarification and documentation on whether all units with shares in the Indian operators are FDI compliant, ET reported.
An official told ET that after Idea and Vodafone provide that documentation, DoT will be able to clear the merger.
Vodafone India was cleared in December 2013 to take FDI in the company to 100 per cent and completed its own process in April 2014.
DoT has been very cautious in its approval of Idea’s application to increase FDI and requested the views of the relevant agencies. A source told ET that RBI informed DoT that there was no FEMA violation, which leaves the final decision to the telecom department.
The merger is in the final stages of the approval process, with DoT secretary Aruna Sundararajan saying in late March authorities were accelerating the process and the only hurdles remaining were clearance by the foreign investment and licence departments.
Both Vodafone Group and Idea parent Aditya Birla Group slated the first half of 2018 for completion of the transaction.
In a joint statement issued in March, the companies announced Vodafone India COO Balesh Sharma would be the CEO of the new business.