Idea faces Rs 600cr penalty for breaching telecom licence norms
NEW DELHI: A telecom department committee has recommended a penalty of Rs 600 crore onIdea Cellular for its merger with Spice Communications, which the panel found to be a ‘wilful’ violation of the telecom licence conditions.
The panel though agreed to a merger of two licences of Karnataka and Punjab circles in the name of Idea Cellular, according to an internal report seen by ET.
In levying the penalty, the DoT committee has not only upheld the department’s previous contention of ‘illegality’ of the merger but also scaled up the penalty to be imposed from Rs 300 crore.
A four-member committee headed by member, technology, Anil Kaushal, had been set up to review the telecom department’s previous decision of issuing show-cause notices of Rs 300 crore for merging six of Spice’s telecom permits with Idea Cellular in Punjab, Karnataka, Delhi, Haryana and Maharashtra as Idea bought into Spice in 2008.
The committee has found that Idea Cellular went ahead with the proposed merger with Spice despite the telecom department’s clear instructions in January 2010 that the merger was not legally permissible and it violated the cross-holding norms.
The cross holding norms of the unified access service licence (UASL) barred a telecom company or its promoter from holding equity of more than 10% in another telecom company in the same service area.
Idea Cellular, however, despite its permits in those six circles went ahead and acquired a 41.09% stake in Spice, the committee has concluded.
“Consequent upon the amalgamation, Idea Cellular was holding two licences bundled with spectrum in each of the six circles in violation of the licence conditions and the guidelines without the required approval,” the committee has highlighted in its findings, the document showed. The committee hence doubled the penalty on Idea by recommending that both idea and Spice should be charged a penalty of Rs 50 crore separately for each of the six circles which were merged.
Since Idea held 12 telecom permits bundled with spectrum in six circles in contravention of thetelecom licence conditions, the penalty recommended cpmes to Rs 600 crore. Relying on the department’s previous argument, the committee has said that the company had further violated the promoter’s lockin clause since two licences of Idea and four of Spice had been issued in January 2008. According to the merger guidelines, these could have been merged only after January 2011.