DoT-Idea set for another legal dispute today

Idea had moved tribunal for not getting spectrum in Punjab circle. 

At a time when the Department of Telecommunications (DoT) is planning to serve show cause notices to Idea Cellular to terminate its licences for alleged violation of cross-holding norms in six circles, another case involving the two is coming up for final hearing tomorrow. 

Just a month before, Idea had moved telecom tribunal TDSAT, against DoT for not getting 3G spectrum for commercial use in the Punjab circle. This, despite the fact that in September 2010, Idea had emerged as one of the select winners of the 3G airwaves in that circle. It paid Rs 322.01 crore in an international competitive bidding process. 

Idea was also pre-qualified for the auction after a strict vetting as called for by the rules. 

For the delay, Idea also wants DoT to pay interest charges at 18 per cent per annum from September, which translates to Rs 4.83 crore compensation per month. Till February, Idea’s total compensation claim stands at around Rs 29 crore. 

Telecom ministry officials, on condition of anonymity, said the ministry’s own finance wing observed that due to the delay in allocating 3G spectrum in Punjab, the government’s exchequer is losing Rs 65 to Rs 70 lakh per month on account of loss of licensee fee. This in technical terms is called AGR losses. 

Legal circles say Additional Solicitor General Amarjit Singh Chandhiok’s opinion that Idea violated laws by holding more than 10 per cent stake in two mobile companies operating in the same region could make matters more contentious. The ASG had communicated his opinion to DoT in a letter dated February 15. 

Chandhiok is also representing DoT in TDSAT on the same matter involving the ministry and the telco. 

He had maintained that by acquiring Spice Communications in October 2008, Idea holds overlapping mobile licence in six telecom circles. 

Chandhiok said Idea Cellular and Spice Communications also violated the April 2008 merger guidelines, which bars new entrants from selling stakes within three years of obtaining licenses. Spice had obtained four of its six mobile permits in 2008, ahead of the deal with Idea. 

Idea Cellular officials when contacted did not want to comment on the issue. Chandhiok told Business Standard: “The matter is subjudice. It’s a sensitive matter. I cannot comment on it.” Based on this view, DoT may even slap a Rs 300 crore fine on Idea. 

Idea has maintained that DoT was always kept in the loop from June 2008, the moment the merger between Idea and Spice was signed. In fact, it had even volunteered to surrender licences and spectrum if it was required by law. On top of it, it has also paid Rs 843 crore as an entry fee and maintained bank guarantees of Rs 350 crore. But if DoT accepts the ASG’s views, then Idea may not get any refund of the entry fee. 

“One more facet of the erratic and arbitrary functioning of the DoT is its refusal to give 3G spectrum to Idea for Punjab when the scheme of merger between Idea and Spice was sanctioned by the court, which is the last and final authority. Also, having given them allotment letters in 10 circles, DoT is obliged to give spectrum for the 11th, which is Punjab,” said Gopal Jain, a senior telecom sector lawyer. 

According to Jain, DoT was justifying the “indefensible by raking up a non-issue as an alibi, that too after three years, despite repeated requests from Idea.” Idea is yet to receive a show cause notice from DoT. 

Legal sources said, the timing of the ASG’s opinion is equally interesting as on February 12, the TDSAT judge had given the government only one week to revert as to why it had been delaying the matter.