Companies

Licence overlap: DoT gets stay on Idea-Spice merger

Our Bureau New Delhi | Updated on November 23, 2017 Published on April 01, 2011

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Idea blames DoT for ‘delay in clearing licence amendment'



The Delhi High Court has stayed the merger between Idea Cellular and Spice Telecom on a complaint filed by the Department of Telecom that the deal between the two operators was in violation of the licence conditions.

The merger deal was signed between the two companies in July 2008 wherein Idea picked up 41.09 per cent stake in Spice for about Rs 2,700 crore.

The DoT had not approved the deal till now because the merged entity ended up having two sets of licences in six circles, including Punjab and Kerala. This is not permitted under the merger and acquisition rules.

Recently, the Additional Solicitor-General of India had also held Idea Cellular to be in violation of the lock-in period clause which stipulates that a company cannot enter into an agreement for merger before three years from the effective date of licence.

In this case, new licences were issued to Spice and Idea Cellular on January 25, 2008. Hence, the two could not have merged operations until January 2011.

Reacting to the development, Idea Cellular blamed the DoT for delaying a resolution of the issue despite the company offering to unconditionally surrender the overlapping licences way back in 2008.

“The inexplicable delay by the DoT in clearing the licence amendment has of course harmed Idea and consumer interest, but crucially has caused, and continues to cause, loss of crores of rupees in revenue to the exchequer every passing week,” the company said in a statement.

“Apparently to cover for its inefficiencies, the DoT is now indulging in duplicity and muscle flexing. Idea will resist and not be bullied,” it added.

The stay order issued by the court comes as a blow to the Aditya Birla Group-owned Idea Cellular as it cannot roll out 3G services in these six circles until the matter is resolved.

The DoT has refused to give 3G spectrum to Idea Cellular in four of the six overlapping circles.

On Friday, the Idea Cellular stock closed up 0.15 per cent at Rs 67.60 on the BSE.

> tkt@thehindu.co.in

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Published on April 01, 2011
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