Idea to challenge DoT's Rs 600 cr penalty

Penalty relates to acquisition of Spice Telecommunications in 2008, which DoT says violates its M&A terms

Idea Cellular today said that it will challenge Rs 600 crore penalty slapped on it by the telecom department. The penalty relates to the acquisition of Spice Telecommunications in 2008, which the department claims violates its merger and acquisition conditions.

“Idea is preparing to take necessary steps to challenge the DoT letter at appropriate forum,” the company said, in a filing on the Bombay Stock Exchange. Idea acquired Spice Communications which had operations in six circles. Department of Telecom claimed that the circles that they acquired businesses in, overlapped with licences that they already possessed.

Two licences in Karnataka and Punjab have come under the scanner now, for which the department sent a notice demanding Rs 600 core penalty which is to paid in 15 days. In early 2011, DoT had even got an 'ex parte' stay on Idea Spice merger. Idea later appealed on the matter. The company claimed that they had been trying to return the licences that they had in the circles where overlapping occurred, however the process was not expedited by the government.

“The division bench of Delhi High Court passed an order in July 2012 directing DoT to give its final decision on transfer of operational Spice licenses of Punjab and Karnataka in the name of Idea,” the company said in a filing.

Over the weekend, however, Idea received a letter from DoT saying that it is prepared to take the merger of Spice and Idea on record and change the name of two Spice licenses in Punjab and  Karnataka to Idea, after they pay the penalty, along with other list of compliances. The shares of Idea traded flat in today's trade to close at Rs 175, according to data available on the Bombay Stock Exchange.