SC asks Vodafone to pay Rs.2000 crore
What's the story
Supreme Court has asked Vodafone Mobile Services Ltd (VMSL) to pay Rs.2,000 crore to the Department of Telecom (DoT) prior to receiving approval for a proposed merger of its four entities into itself. The four subsidiaries set for merger include - Vodafone East, Vodafone South, Vodafone Cellular and Vodafone Digilink. The merger would take Vodafone a step closer to its planned IPO.
2 Sep 2013
Vodafone merger plans hit a roadblock
Vodafone first proposed the amalgamation of its subsidiaries in 2012. The merger plans hit a roadblock with the department of telecommunications (DoT) ruling that the merged entity would have to sign an undertaking to migrate to the new unified licence notified by the government. This meant that Vodafone would have to pay for the spectrum it already owns.
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What is the Unified License?
The Unified License essentially delinks the licence from the spectrum and to migrate, Vodafone would have to pay for the spectrum and the licences separately, while the previous UASL (unified access services licences) were allotted to them with spectrum bundled.
Approval
Conditional approval received by Vodafone
Vodafone got conditional approval for the merger of its various entities from DoT on 8 December 2014, subject to certain payments. Vodafone however contended that such amounts were not payable to DoT. The DoT thereafter issued revised letter on 6 May 2015 seeking certain undertakings instead of payments for AGR (adjusted gross revenue) and spectrum usage charges.
TDSAT
Merger matter reaches the TDSAT
The government had asked Vodafone to deposit Rs.6,678 crore in pursuance to its proposed merger. The demand was contested by Vodafone which had agreed to pay only Rs.1,773 crore. Vodafone filed a petition in Telecom Disputes Settlement and Appellate Tribunal (TDSAT) and the TDSAT passed an interim order on 19 October 2015 directing DoT to provisionally allow merger of licenses.
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DoT appeals against TDSAT order
Dept. of Telecom challenged the interim order given by the Telecom Disputes Settlement and Appellate Tribunal in the Supreme court.
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Payment inclusive of spectrum charge
The Rs.2000 crore that Vodafone was asked to pay under various heads includes the payment of a one-time spectrum charge, the spectrum usage charge and computation of the adjusted gross revenue (AGR).