Insta
Consolidation Deferred: This Is Why Vodafone-Idea Merger Is Likely To Be Delayed
Swarajya Staff
Jun 25, 2018, 09:50 PM | Updated 09:50 PM IST
Save & read from anywhere!
Bookmark stories for easy access on any device or the Swarajya app.
Jio changed Indian telecom. Arguably, the most important consequence of Jio’s entry has been the consolidation in the telecom sector. By late 2017, within a year of Jio launching its commercial services, four major players—Reliance Communications, Tata Tele, Telenor and Aircel—had already exited the field. By mid 2018, two giants, Vodafone and Idea has announced their merger.
Consolidation was on. The mega-merger was expected to be completed by 30 June 2018.
Until, reports came in that the Department of Telecom (DoT) was expected to recover One Time Spectrum Charges worth Rs 4,700 crore from Vodafone. According to this report in the Economic Times, an official source told PTI that the DoT “will ask Vodafone to either clear dues or furnish bank guarantee before merger with Idea”.
Union Minister of State (Independent Charge) For Communications, Manoj Sinha, is reported to have asked DoT to seek legal opinion on whether a demand to seek the dues can be made to Vodafone. The DoT is learnt to have replied in the affirmative.
Readers may also note that this is a phase when the industry is supposed to be under stress. Back in May, Vodafone India announced its fourth quarter 2017-18 results – as against a revenue of Rs 10,547 crore in the fourth quarter of 2016-17, this year’s revenue was Rs 7,902 crore – a 29 per cent drop.
Earlier, it was Airtel’s India operations that reported their first loss in 15 years – Rs 652 crore – in the fourth quarter of fiscal year 2018. Idea’s losses were reported to be Rs 4,141 crore recently.
Even the Economic Survey 2017-18 had said: “It is important to note that the telecom sector is going through a stress period with growing losses, debt pile, price war, reduced revenue and irrational spectrum costs.”
The decision of the DoT regarding Vodafone thus, has come at a critical time. Watch this space for more updates.
Save & read from anywhere!
Bookmark stories for easy access on any device or the Swarajya app.
Support Swarajya's 50 Ground Reports Project & Sponsor A Story
Every general election Swarajya does a 50 ground reports project.
Aimed only at serious readers and those who appreciate the nuances of political undercurrents, the project provides a sense of India's electoral landscape. As you know, these reports are produced after considerable investment of travel, time and effort on the ground.
This time too we've kicked off the project in style and have covered over 30 constituencies already. If you're someone who appreciates such work and have enjoyed our coverage please consider sponsoring a ground report for just Rs 2999 to Rs 19,999 - it goes a long way in helping us produce more quality reportage.
You can also back this project by becoming a subscriber for as little as Rs 999 - so do click on this links and choose a plan that suits you and back us.
Click below to contribute.