DoT seeks clearance of dues before mergers

13 Apr 2018

The Department of Telecommunication (DoT) is expected to ask Vodafone India and Idea Cellular to clear dues totalling around INR188.7 billion (USD2.9 billion) relating to license and spectrum usage charge (SUCs) and one-time spectrum charges (OTSCs) as a precondition of their merger, the Economic Times writes, citing sources familiar with the development. Vodafone’s fees are understood to comprise SUC of INR55.3 billion and OTSC of INR36.0 billion whilst Idea’s dues include INR76.3 billion SUC and INR21.1 billion OTSC. The DoT’s authority to make such demands was questioned by an executive of one of the cellcos, however, as the fees relate to the calculation of an operator’s adjusted gross revenue (AGR) – a matter that has been in dispute for more than a decade and is still sub judice. Sources told the paper that the DoT intends to instruct Vodafone to clear its OTSC dues, as it will no longer exist as a licensee post-merger although bank guarantees may be accepted for Idea’s OTSC.

In a related development, meanwhile, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) has asked the DoT to approve the merger of Telenor India and Bharti Airtel without a bank guarantee. The ministry had asked Airtel to submit a guarantee of around INR17 billion as a condition of its approval of the merger. The guarantee relates to an OTSC of INR15 billion for airwaves allocated to Airtel without auction, plus INR2 billion for Telenor’s outstanding spectrum fees. The DoT had also sought an undertaking from Airtel that it would be liable for any pending dues relating to the two companies and any demands raised by the DoT for Telenor India; an Airtel spokesperson confirmed that the operator has submitted a letter of compliance to the DoT on the matter.

India, Bharti Airtel, Department of Telecommunications (DoT), Telenor India, Vodafone Idea (previously Idea Cellular), Vodafone India