DoT transfers Spice's licences to Idea for Punjab and Karnataka

The telecom department (DoT) has transferred licences for Punjab and Karnataka circles held by erstwhile Spice Communications to Idea Cellular following a Supreme Court order.

 
"The DoT has, on February 1, 2014, transferred the licences for Punjab and Karnataka service areas held by erstwhile Spice Communications Limited to Idea," Idea Cellular said in a regulatory filing.

 

It, however, said this is subject to final outcome of Idea petition at TDSAT challenging penalties imposed by DoT in connection with acquisition of erstwhile Spice, which remain stayed.

 

Idea said the action of DoT is a result of order passed by Supreme Court on January 29, 2014, wherein the DoT was directed to endorse the erstwhile Spice licences to Idea.

 

The company added it was pursuant to Idea submitting an undertaking to the court as well as the DoT to the effect that in case Idea is held liable by TDSAT to pay the penalty and other dues, then DoT would be at liberty to invoke the bank guarantees furnished by Idea.

 

"... In such eventuality, Idea would replenish the bank guarantees to the extent of their encashment. The court order also states, inter alia, that all remedies available to Idea are specifically kept open," the filing said.

 

The company said transfer of licences would enable Idea to commercially use 3G spectrum won by it in 2010 auction for which it had paid Rs 322 crore to DoT.

 

"The long pending issue of transfer of Punjab and Karnataka licences of erstwhile Spice, pending since March 2010, thus now stands resolved," it added.

 

Idea Cellular had received a letter from DoT imposing a penalty of Rs 600 crore for alleged violation of licence conditions in its merger deal with Spice Communications.

 

The company said Spice Communications was merged with Idea effective March 1, 2010, and the merger was reconfirmed by a Delhi High Court order passed on July 13, 2012. In 2008, Idea Cellular acquired 41.09% stake in Spice Communications. The companies merged in 2010, which resulted in overlapping of licences in six circles.

 

As per the rules, a telecom operator cannot hold more than 10% stake in another operator in the same circle.

 

At the time of the merger, both the companies had licences for Andhra Pradesh, Delhi, Haryana, Maharashtra, Punjab and Karnataka.

 

Meanwhile, the Supreme Court in its February 2012 order cancelled Idea Cellular's licences for Punjab and Karnataka circles, while Spice lost its licences for Andhra Pradesh, Delhi, Haryana and Maharashtra.

 

As a result, only Punjab and Karnataka licences are operational post the merger.