Idea Cellular and Vodafone made joint a payment of Rs 7,248.78 crore under protest to the Department of Telecom for merging their mobile business, as any further delay in approvals would hurt the retention of 430 million subscribers and would hurt the servicing of the large financial gross debt, amounting to over Rs 1,25,000 crore.
The merged Vodafone and Idea entity will likely launch aggressive tariffs to regain lost customer base in the prepaid segment.
According to an Economic Times report, Idea has lost subscribers in 21 of the 22 circles with the most losses sustained in Maharashtra, its biggest market. Vodafone has lost subscribers in 14 of the 22 circles.
The report quoted IIFL’s Executive Vice President, Markets and Corporate affairs, Sanjiv Bhasin as saying the latest tariff tussle would probably happen in the Rs 150 segment, geared towards the rural subscriber base.
In order to comply with the regulations limiting the subscriber base of a company to 50 percent, the merged Vodafone-Idea entity will need to lose customers in six circles — Gujarat, Haryana, Kerala, MP, Maharashtra, and UP (West) — within the year.
related news
The report said the combined entity aims to regain the customers that it lost to the competitive prices put forth by rival telcos Bharti Airtel and Reliance Jio.
On July 25, Idea Cellular and Vodafone made joint a payment of Rs 7,248.78 crore under protest to the Department of Telecom for merging their mobile business.
This means the group would look to legally dispute the payment in court at a later time. The report said the main motivation for the payment was that any further delay in approvals would hurt the retention of 430 million subscribers and would hurt the servicing of the large financial gross debt, amounting to over Rs 125,000 crore.
The final nod from DoT is expected in a few days.
(Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd)