The company can lose Rs. 300 crore in the process
Idea took controlling stake
Seeks clarity on licensing issues from DoT
NEW DELHI: The Government has asked Idea Cellular to surrender either its licence or that of its latest acquisition Spice Communications in Punjab and Karnataka to avoid overlapping, but said it would not make any refund of licence fees.
“Policy is very clear. What will one do with two licences? You need just one to offer the service. Obviously, Idea has to return one licence (in each circle) but there wouldn’t be any refund for this,” Telecom Secretary Sidhharth Behura said here on Monday.
Idea could lose Rs. 300 crore in this process.
According to analysts, this may not sound good for the company which had reported a fall of 14.7 per cent in net profit to Rs. 263.10 crore in the first quarter of this financial year due to forex losses and higher interest charges, even as its revenues grew over 47 per cent, due to robust subscriber additions.
Analysts said Idea could surrender its own licences and retain Spice licences in both circles as Spice has 800 Mhz spectrum in these two areas which could accommodate more users.
Besides, Spice is already offering services there whereas Idea is yet to start the service. It has got spectrum for Karnataka and for Punjab it has just got the licence.
Idea Cellular, which had acquired a controlling stake in Spice Communications in June for about Rs. 2,700 crore had sought clarity on the licensing issues from the Department of Telecom.
The DoT, in its response, had said that post-merger with Spice, Idea would have to return one of the licences in each circle of Punjab and Haryana.
Idea responded by saying it is willing to demerge its licences in Punjab and Karnataka circles into a separate entity where it would not hold more than 10 per cent stake.
The present law does not allow telecom companies to hold over 10 per cent stake in two different licences in the same circle. Idea has also said that if the DoT did not accept this option, it is willing to surrender the licences issued to it in January for Punjab and Karnataka circles.
In this scenario, the company has said the DoT must refund the Rs. 300-crore it has paid as entry fee for its licences in these circles.
Similarly, in January, Spice was awarded mobile licences in four circles — Delhi, Haryana, Andhra Pradesh and Maharashtra.
Idea holds spectrum for Mumbai, Bihar, Orissa, Tamil Nadu (including Chennai) and Karnataka, and licences for the remaining six circles.
With the launch of services in the above circles (except Karnataka) before the end of the calendar year and after the proposed amalgamation of Spice Communications, Idea’s footprint will cover about 90 per cent of India’s telephony potential. — PTI