NEW DELHI: The Department of Telecom on Tuesday revealed that the merger proposal between two of the largest telecom firms in India — Vodafone and Idea — is in the last stages of approval. The Vodafone-Idea merger is part of the large-scale consolidation currently under progress in the telecom sector, as hyper-competition and high debt drive companies to merge resources or exit the business.
The news comes just a day after Trai announced that telecom sector revenues dipped by 8 per cent 8.1 per cent year-on-year during the third quarter of the current financial year, even as licence fee collections by the government dropped by 16 per cent.
“It is in final stages of approval... FDI approvals are involved and as also the liberalisation of licences... There are a number of clearances involved. We are in the process of expediting it,” telecom secretary Aruna Sundararajan said on Tuesday on the sidelines of an event.Vodafone and Idea had just last week announced the top management team for the soon-to-be-merged entity, naming Balesh Sharma as the new CEO and K M Birla as chairman.
The merger is slated to create India’s largest telecom operator in terms of customer base and revenue market share and is likely to completed by June this year.Telecom firms like Bharti Airtel and the Vodafone-Idea combine are engaged in a rancorous price war with new entrant Reliance Jio, which as seen revenues plunge for all. According to data released by sector regulator Telecom Regulatory Authority of India (Trai) on Tuesday, the fall in revenues has been across the board. Adjusted gross revenue (AGR) earned by companies from sale of telecom services also declined 16.05 per cent to Rs 38,536 crore, while the spectrum usage charge, one of the major components of the government’s revenue, declined by 29.72 per cent to to Rs 1,152 crore in the period under review from Rs 1,639 crore a year ago.
Monthly average revenue per user (ARPU) earned by telecom service providers for GSM and 4G mobile services continued to fall too, declining by 5.37 per cent to Rs 79 from Rs 84 recorded in the previous quarter. Licence fees collected from telecom service providers on the basis of AGR consequently declined by 16.04 per cent to Rs 3,104 crore from Rs 3,249 crore a year ago.