India’s Department of Telecoms had been expected to approve the merger early this week, but that now appears to be in doubt as one off spectrum charges threaten to delay the deal
Shares in India’s fourth biggest telco, Idea Cellular dropped by 3.3 per cent on Monday, upon news that the company’s proposed merger with Vodafone India is likely to be delayed.
India’s telecoms industry had been bracing itself for an announcement saying that the deal was complete, however, sources at the Economic Tomes of India now say that the deal could miss the 30th June deadline.
Idea Cellular’s share price stood at 58.55 rupees per share, down from 60.05 rupees at close of play on Friday.
The delay is believed to be due to an outstanding $706.4 million (4,700 crore rupees) funding that must be raised.
"Vodafone India had merged its all arm into one company and there are dues of around Rs 4,700 crore related to one-time spectrum charges (OTSC) on the company. DoT will ask Vodafone to either clear dues or furnish bank guarantee before merger with Idea," an official source told The Economic Times of India.
Both companies will be hoping that the merger is approved as quickly as possible, as the pair seek refuge from India’s savage market conditions by consolidating their positions. With wafer thin margins and an extremely crowded market place, India remains one of the toughest markets for telcos to turn a profit in.