DoT considers revoking six of Idea’s licences, may yet issue fines related to spectrum cross-holding

23 Feb 2011

Indian mobile network operator Idea Cellular looks set to be served notices this week by the Department of Telecommunications (DoT) claiming that it violated regulations regarding the cross-holding of spectrum in six circles following its merger with Spice Communications. According to the Business Standard, the DoT is also likely to fine Idea around INR3 billion (USD66 million) for similar violations in other circles, while the regulator will look to cancel the four licences issued to Spice and two that were awarded to Idea which neither used for the launch of commercial mobile services; in those circles where services had been launched a penalty will be imposed. The likely move by the DoT follows suggestions made by the Additional Solicitor General of India, who claimed earlier this week that Idea had violated regulatory norms by holding more than a 10% stake in two mobile firms in the same circle and recommended cancelling the overlapping licences.

For its part Idea has continued to deny that it contravened any regulations, with a statement from the operator noting: ‘The Idea-Spice merger, since approved by the courts, happened to involve six overlapping licences. Despite being issued spectrum for five of these, it is Idea that advised DoT that it was not using such spectrum, in effect, placing overlapping licences in a de facto escrow pending receipt of DoT’s formal letter of merger, including surrender if at all that was attracted. The company has paid INR8.43 billion entry fee, and maintained bank guarantees of INR3.5 billion, but has derived nil benefit … For reasons unknown, DoT has, so far, not issued a merger letter. The company has asked for merger of licences as per guidelines, which incidentally yields the company nothing beyond the incumbent licence entitlement… driven to the wall by this inert approach of DoT, Idea has approached the telecoms tribunal for succour, where the matter is currently pending.’