Indian telecom service provider Idea Cellular on Tuesday said it faces Rs 600 crore penalty by the Department of Telecom (DoT) for alleged violation of licence conditions in its merger deal with Spice Communications.
The Aditya Birla group-owned Idea Cellular said it will take necessary steps to challenge the DoT action at an appropriate forum.
In its letter to Idea, dated November 29, DoT said the merger of the operational Spice licences of Punjab and Karnataka can be taken on record if Idea Cellular pays up the penalty within the next 15 days.
According to telecom license rules, a telecom operator cannot hold more than 10 percent stake in another operator in the same circle. Spice Communications was amalgamated with Idea effective March 1, 2010, after approval of merger by the Gujarat high court on November 26, 2009, and the Delhi HC on February 5, 2010, the filing said.
The statement said the Delhi HC had passed an order on July 13, 2012, asking DoT to give its final decision on transfer of operational Spice licences of Punjab and Karnataka in the name of Idea Cellular.
“The DoT has written that the department is prepared to take the merger of companies…on record and change the name of two Spice UAS licences of Punjab and Karnataka service areas, subject to Idea paying financial penalty besides other list of compliances,” the filing said.
In 2008, Idea Cellular acquired 41 percent stake in Spice Communications. The companies merged in 2010, which resulted in overlapping of licences in six circles. At the time of the merger, both the companies had licences for Andhra Pradesh, Delhi, Haryana, Maharashtra, Punjab and Karnataka.
Meanwhile, the Supreme Court in its February 2012 order cancelled Idea Cellular’s licences for Punjab and Karnataka circles, while Spice lost its licences for Andhra Pradesh, Delhi, Haryana and Maharashtra. As a result, only Punjab and Karnataka licences are operational post the merger.