Bharti Airtel had on Wednesday said that is shocked and disappointed to receive a demand notice of Rs 650 crore from the Department of Telecom pertaining to Subscriber Local Dialling service to its subscribers.

The company said that that the demand for Rs 650-crore penalty is devoid of any merit and has no justification both on facts and in law.

The case dates back to 2002-2005 when Airtel was found to be offering its customers a service called Subscriber Local Dialling. Under this service, a subscriber would be able to get all calls as a local call while roaming.

For example, if a Delhi subscriber travels to Mumbai, he would be able to get incoming calls from Mumbai contacts as a local call.

According to the DoT, such a call should have been routed to Delhi first on the national long distance network and then brought back to Mumbai.

By routing the call in Mumbai itself, Airtel has bypassed the long distance network which is against the licence conditions, the DoT said in an internal note.

According to the Department, this caused revenue loss to the Government in the form of lower licence fee from long distance operations.

However the company said that the regulator had found this service to be customer friendly and in compliance of the licence conditions.

“The total revenue this SLD service generated for Bharti Airtel was a few lakhs of rupees, a fact which is fully known to DoT. Yet strangely, without as much as giving us a proper hearing, DoT has after eight years issued a demand notice of Rs 650 crore in complete disregard of the natural process of justice,’’ Airtel said in a statement.

“We are disappointed that DoT — which has the bounden duty to act rationally, has thought it fit to issue such a baseless penalty order, leaving us with no choice, but to litigate. We wish DoT was mindful of the damage such meritless demands have on investor sentiment and the frustration such actions cause to the companies engaged in vital infrastructure,’’ it added.

The company urged DoT to set out a cogent policy on imposition of penalties so that the telecom companies can operate in a rational and transparent environment.

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