Vodafone Idea merger that stands to become the third largest mobile service operator after Bharti Airtel and Reliance Jio, has already breached its June deadline. The Spectrum dues that the merger owes to the Department of Telecommunication (DoT) stand at ₹7268 cr.

The spectral charges include bank guarantee and cash payments. A sum of ₹3342 cr must be paid as bank guarantee and ₹3926 cr as cash payments. Idea cellular will pay for the bank guarantee and Vodafone will arrange for the cash payments.

A few days back, Vodafone Idea requested the DoT for a recalculation plea. They cited ‘difference in opinion’ in the dues calculated and presented by the Telecom Department. ‘They (the companies) have come back to us saying there is some difference of opinion in the calculation of dues. So DoT is looking into it and we have not taken a view yet’, Telecom Secretary Aruna Sundararajan told on the sidelines of a broadband event organized by CUTS International.

However later, the department clarified that the numbers were correct and required no changes. Idea Cellular can challenge the dues in Court but chose not to, since the merger had already delayed by a month.

The future of Vodafone Idea merger

The combined value of the merger stands at USD 23 billion and their market share will near 35%. The subscriber base in this merger will come close to 43 cr and their combined debt is at ₹15,000 cr.

Based on the reports by BS Research Bureau, the average revenue per user (ARPU) of Vodafone Idea is predicted at ₹125 while that Bharti Airtel is at ₹112, for the financial year 2019. With the ARPU of Airtel being lower than Vodafone Idea, their operating margin is still large. Airtel’s operating margin is at 36.4% and Vodafone Idea is at 20.9%.

Vodafone must, therefore, draft schemes that cater to a wide geography. Their inclusive markets must connect customers in villages and cities alike. ‘Rather than becoming another mobile operator, Vodafone-Idea should focus on geographies, consumer segments, or products where competitors are weak and they can build dominance,’ says Jayanth Kola, founder-partner, Convergence Catalyst.

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