Vodafone Idea Merger Case Signifies Improvement in Ease of Doing Business in India: Report

The swift merger of Idea and Vodafone in India has delighted the top honchos of the corporate world who are now able to see India at par with the other corporate-friendly countries. Earlier, India was the epitome of red-tape, incessant government forms and numerous delays when it came to deals, and mergers but slowly and steadily things are changing for the better.

Ease of Doing Business:

These thoughts are echoed by Vittorio Colao, who said at the World Economic Forum (WEF) governors’ meeting in Davos that, “The swift way in which the Idea-Vodafone merger is progressing under a year shows the improvement in ease of doing business in India.” Earlier, he used to be a staunch critic of the never-ending bureaucratic processes of India but he was delightfully surprised when the Vodafone-Idea Cellular merger went through in record time.

Iconic Vodafone and Idea Cellular Merger:

Both the companies had decided to merge in March 2017 and they had hoped to complete the entire process by June 2018. Initially, things were progressing smoothly on the merger front but soon some pending issues cropped up, which put the entire deal in grave danger of being jeopardised. Things started going downhill for the merger when the Department of Telecom suddenly decided to see a second opinion on the legalities involved over the pending dues from the Assistant Solicitor General of India. DoT wanted the corporates to pay up the spectrum usage charges, one-time spectrum charge and the license fees.

Issues in the Merger:

Despite the hefty fees involved, the companies – Idea and Vodafone decided to pay up over Rs. 7,200 crores to the DoT so that the merger could proceed smoothly. Even though they protested against the amount yet they said that “any further delay for according the approval of Vodafone licences and Idea would permanently impair the merged entity.”
After the payment of the dues, the final approval was granted to the companies for their merger on July 26.

In this regard, the telecom secretary Aruna Sundararajan said that “It has been quite a cliffhanger for us and there were many occasions when there were uncertainties. We had intense negotiations. At times, they were in the next room discussing and at times, we took a step without knowing what they would do. All sides would go back to their consultants, legal experts and come back with something else that presented a new scenario.”

Other competitors were also trying to put a spanner in the works and doing their utmost to derail the merger. “Of course, some forces were at play, but that is the name of the game,” according to a government official.

The humungous amount of Rs. 7,200 crores, of course, doesn’t sit very well with the top officials of Vodafone and Idea. But all said and done, they had very little choice in the matter because the alliance was almost on the brink of a collapse if the dues had not been paid up. “We will still wait for DoT to respond to our presentation, where we have told them of our estimates and calculations. Basis what they say, we will decide whether to move court or not. But we have kept that option open despite paying up (dues),” says one of the people in the know. Possibly the biggest gain from the merger has been the creation of a template. “Overall, there is clarity and this will help for future mergers,” says Sundararajan.

The post Vodafone Idea Merger Case Signifies Improvement in Ease of Doing Business in India: Report appeared first on MySmartPrice.

from MySmartPrice https://ift.tt/2LAVNDH