SC asks Vodafone to pay Rs 2,000 crore ahead of merger approval

The Supreme Court on Monday asked the telecom giant Vodafone to pay an interim amount of Rs 2,000 crore to the Department of Telecom (DoT), prior to receiving a nod to merge four of its subsidiaries--Vodafone East, Vodafone South, Vodafone Cellular and Vodafone Digilink into Vodafone India, ahead of its planned IPO.

The apex court bench comprising justices J.S. Khehar and R. Banumathi said that the government will approve the merger as soon as the amount is paid. 

Under the heads of the merger, which includes payment of a one-time spectrum charge, the spectrum usage charge and computation of the adjusted gross revenue (AGR), the telecom company, Vodafone was asked to pay Rs 6,678 crore to the government, Additional solicitor general P.S. Narasimha said.

Though later, Vodafone had challenged the demand notice in the Telecom Disputes Settlement and Appellate Tribunal.

However, on March 4, the company in a letter had agreed to pay Rs 1,773 crore to the government, provided the merger was approved by March 10, said media reports.

The company is planning to merge the subsidiaries under one company because its licence for the Tamil Nadu circle is about to expire next month while for the Chennai circle, the licence is valid up to 2021. With the merger, the licence will be valid till 2021 which will also help the company for its initial public offering preparations.