Paving the way for the approval of Idea Cellular and Vodafone India merger, the department of telecommunications (DoT) has cleared the former's proposal to increase foreign direct investment (FDI) limit to 100 per cent in the merged entity.
Idea currently has FDI limit of 67.5 per cent.
“The approval is for total foreign investment up to 100 per cent in Idea Cellular and total indirect FDI in its relevant subsidiaries, Aditya Birla Telecom and Idea Cellular Infrastructure Services,” Idea said.
The FDI approval is a milestone in the merger of the two companies, creating the country's largest telecom operator named Vodafone Idea. The two parties had already secured other statutory approvals from the Securities and Exchange Board of India, National Stock Exchange, BSE, Competition Commission of India and National Company Law Tribunal (NCLT), Mumbai. and NCLT, Ahmedabad.
The merger is expected to complete in the first half of this year, subject to the final approval from the DoT, the statement added.
Idea has called an extraordinary general meeting on June 26 to consider the proposals, including changing the name of the merged entity and raising funds of Rs 150 billion through non-convertible debentures. The top operator will have a revenue market share of around 37 per cent and around 433 million subscribers.
The companies had earlier this year announced a restructuring of the leadership team for the merged business that would have Kumar Mangalam Birla at the helm as the non-executive chairman. Vodafone Chief Operating Officer (India) Balesh Sharma would be chief executive officer of the merged entity.