That was Vittorio Colao at the World Economic Forum (WEF) governors’ meeting in Davos earlier this year. Though a vocal critic of the labyrinthian regulations and bureaucracy of the world’s largest democracy, the chief executive of Vodafone Group Plc was seemingly delighted about the record speed of regulatory approvals that were coming along after Vodafone and Idea decide to join forces in March 2017. The June 2018 deadline to consummate the union and create the world’s secondlargest telecom giant looked plausible.

And then the call dropped. Suddenly, chances of the whole thing getting tripped up or entangled in legalities became very real, and that meant a hit on $10 billion worth of synergies. By mid-June, the tide had turned for the worse. The Department of Telecom (DoT) surprised all by seeking a second round of legal opinion from the Assistant Solicitor General (ASG) on the demand for dues — always a contentious issue as most demands such as licence fee, spectrum usage charges and one-time spectrum charge (OTSC) had been stayed by courts. According to current mergers and acquisitions (M&A) regulations, only OTSC needed to be paid up.

In his first opinion, the ASG had said the merger of Vodafone’s six subsidiaries with Vodafone Mobile Services (VMSL) in 2014-15 must be completed and balance OTSC paid. But then DoT sought to clarify if demands related to the merger of six units with VMSL are also to be raised, along with those related to the present merger between Idea and Vodafone. Divergent views also emerged within the department on the mode of seeking dues. One side argued that all dues on VMSL must be sought in cash, while the other said it could be a combination of cash and bank guarantees.

Even though DoT needed to showcase the ‘ease of business’ mantra that the government is trying to live by, it didn’t want any post facto finger-pointing or controversies from vigilance or other agencies. Thus, it decided to proceed with extreme caution. The matter was also very delicate inasmuch as the merger was the first 100% FDI proposal, into Idea Cellular, to come up directly for departmental clearance after scrapping of the Foreign Investment Promotion Board (FIPB).

“No one wanted to take any decision in haste or give any leeway because 10 years later, no one wants to have a legal case on their hands alleging any wrongdoing,” says an official who was dealing with the issue at that time. Another point of clarification was the date from which bank guarantees for OTSC be sought from Idea on airwaves beyond 4.4 MHz in 11 circles, say sources. OTSC dues are based on DoT rules that require a telco holding more than 6.2 MHz in a circle between July 2008 and December 31, 2012, to pay a marketlinked price for the excess spectrum held.

Likewise, the telcos may be told to pay the market price for airwave holdings beyond 4.4 MHz per circle between January 2013 and the expiry of their respective licences. DoT had first raised a claim for more than Rs 8,100 crore, including OTSC, of which VMSL paid Rs 2,450 crore. The balance remained as the case was pending in the telecom tribunal. Finally,the telecom department asked the operators to pay more than Rs 7,200 crore as dues. Both telcos asked for recalculation as they felt the final numbers should be lower than what was being asked. “We were comfortable at that point. But surprise is the only constant in the way the Indian government works…” quips a senior executive at one of the two companies on condition of anonymity.