Idea may move TDSAT against DoT demand

Idea Cellular is looking at the option of moving the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) against the Union government following a steep demand notice issued by the Department of Telecommunications (DoT) while giving a conditional clearance to its merger with Vodafone India, said a source close to the development.

“All options are open. Everything is being debated and discussed,” a source at Idea said when asked whether the company was moving court. He, however, added that any decision would now be taken in consultation with Vodafone.

Indications till now are that Vodafone may not be willing to challenge the DoT demand. Sources in Vodafone said the company would like to complete the payout to the government as its priority is to close the merger deal at the earliest.

In case Idea Cellular decides to move court, it has to specify which demand has been contested, a DoT official said.

The DoT has asked the companies to pay ~39.26 billion in cash for liberalising spectrum up to 4.4 MHz assigned to Vodafone administratively. Apart from that, a bank guarantee of ~33.22 billion needs to be given by Idea as onetime spectrum charges (OTSC). Idea will also have to give an undertaking that it will pay all past demands made by the ministry, which are currently sub judice.

In the recent case of the AirtelTelenor merger, the DoT’s demand of a bank guarantee was stayed for OTSC.

However, the spectrum liberalisation issue did not arise in that case as Telenor had the entire auctioned spectrum.

Neither Idea Cellular nor Vodafone commented on the matter.

The DoT order also specified that Idea Cellular (ICL) would have to replace the bank guarantees towards annual installments amounting to ~20.05 billion, ~29.37 billion, and ~14.84 billion for spectrum bagged by Vodafone in 2014, 2015, and 2016, respectively. All demands relating to licences of the merging entities have to be cleared by either entity before taking the merger on record, the order said.

In a signal that the deal should not be delayed any further, Telecom Secretary Aruna Sundararajan said on Wednesday that it was in the best interest of Idea and Vodafone to make the payment on the demand notice as soon as possible.

Among the other conditions in the DoT approval, it asked Idea to reduce its market share based on adjusted gross revenues in a few key states including in Haryana, Kerala, Madhya Pradesh, Maharashtra and Uttar Pradesh (West). When merged, Vodafone Idea would emerge as India’s largest telecom operator with over 43 per cent of market share.

Corporate lawyers said some of the demands made by DoT against Idea Cellular may not clear the judicial test. “Idea will have to ultimately move the Supreme Court to get a clearance for the merger,” said a lawyer who did not want to be quoted.