Telecom Ministry To Decide On Idea’s 100% FDI Proposal: Suresh Prabhu
The Telecom Ministry is the competent authority to take the final call on Idea Cellular Ltd.’s proposal for infusing 100 percent foreign direct investment in the company, Commerce and Industry Minister Suresh Prabhu has said.
The Department of Telecom has put some condition while seeking views of the Department of Industrial Policy and Promotion on the proposal.
“The matter is completely in the domain of the line ministry. We have already clarified. No need of our approval,” Prabhu told PTI In an interview.
It was communicated to DoT that they are the competent authority to deal with the proposal, he said.
“We have sent back (the proposal) immediately. We have stated that it is for you to decide,” he said, adding that tax liabilities do not constitute additional condition.
Idea’s proposal assumes significance against the backdrop of pending merger with Vodafone India to form the country’s largest telecom operator.
The FDI policy allows an overseas firm to buy up to 49 percent stake in an Indian telecom company under automatic approval route. But the government approval is required for stake above 49 percent.
Idea and Vodafone announced last year that they would combine their operations to create the country’s largest telecom operator worth over $23 billion, with a 35 percent market share.
Foreign shareholding in Idea as on March 31, 2018, stood at around 34 percent, including 7.49 percent in promoter group and the rest as public shareholders. British telecom multinational Vodafone Group plc is a majority shareholder in Vodafone India.
Foreign shareholding in the combined Idea-Vodafone entity, thus, would breach the automatic approval limit of 49 percent.
According to the Idea-Vodafone merger announcement, Vodafone would own 45.1 percent of the combined company after transferring a 4.9 percent stake to Aditya Birla Group for Rs 3,900 crore in cash, concurrent with completion of the merger.
As the DoT had added a condition in the proposal, the matter was sent to the DIPP.
After the abolition of foreign investment promotion board (FIPB), respective departments and ministries of 11 sectors, including telecom and print media, are the competent authorities for approval of FDI proposals unless they want to add some condition or reject the proposal. In such circumstances, they have to seek the views to the DIPP.
The merged Idea-Vodafone entity will have highest subscriber base of 41 crore accounting for over 35 percent market share and second largest spectrum holding of 1,850 megahertz in the country.
The debt of resultant entity is expected to be around 1.1 lakh crore as per debt situation of Idea and Vodafone India at the end of September 2017.