'Penalty on 3G roaming pacts undermines investors' confidence'

The company has written to DoT objecting show-cause notice issued to it by governemnt

The country’s second largest telecom service provider Vodafone today said that imposing penalty for the 3G intra-circle roaming issue would undermine investors’ confidence.

In reply to the government’s show-cause notice to the company, Vodafone has written to the Department of Telecommunications (DoT) objecting the move, on July 2. It has further said that this is likely to impact future spectrum auctions.

The Indian entity of the British telco has also requested DoT to “withdraw the show cause notice”, and provide explanation to its stand on 3G roaming agreement.

“At the outset we submit that the issue of this show cause notice is without authority of law as also bad in law,” Vodafone Resident Director T V Ramachandran said in the letter.

The company has said that it reserves the right to take appropriate steps to seek damages for the losses that company is facing due to DoT’s stance. The company had received the show cause notice May 31. DoT had also sent notices to other telcos Bharti Airtel and Idea Cellular terming the 3G intra-circles roaming pacts are violation of licence norms.

The DoT notice noted that the agreement signed between the company with Bharti Airtel and Idea Cellular was in nature of sub-leasing of 3G spectrum which is violation of licence conditions.

Vodafone argued that intra-circle roaming was allowed as per clarifications given by DoT before the 3G auctions and the position taken after it invested Rs 11,617.86 crore for 3G spectrum in 9 service area “is contradictory”.

Terming DoT’s stand as “arbitrary, inconsistent, unfair and unreasonable”, Vodafone said it will not only “give rise to serious disputes and challenges but will also irreparably impact all future auctions that may be conducted by the DoT as bidders would have no faith or rely on any statements made by the DoT”.