DoT may raise demand on dues from Idea for spectrum licence fee

Even as the merger process between Vodafone and Idea is underway, the Department of Telecommunications is understood to have decided to recover telecom-related dues of about ₹5,500 crore from the two entities. This proposed move follows the go-ahead from the Additional Solicitor General to recover such dues. Sources close to the development told BusinessLine that ASG has told the DoT that it can raise the demand on dues, including spectrum usage charge, licence fees. Sources also said that Idea may have to pay the full amount of around ₹5,500 crore as it is the transferee company and Vodafone is the transferor.

The dues of Vodafone relate to the 2015 merger of its six companies, which DoT has decided to raise from Idea, who is the transferee company.

The Merger and Acquisition Guidelines of 2014 also says that “If a transferor company holds a part of spectrum, which 4.4 MHz/ 2.5 MHz, has been assigned against the entry fee paid, the transferee (acquiring) company (that is resultant merged entity), at the time of merger, shall pay to the government, the differential between the entry fee and the market determined price of spectrum from the date of approval of such arrangements by National Company Law Tribunal…”

So, DoT had sought the views of ASG on whether it can raise a fresh demand from Idea on dues related to the 4.4 MHz spectrum (administratively allocated) to Vodafone.

Therefore, “The Department is likely to raise a demand to Idea regarding the Vodafone’s pending dues and it will also raise a demand of around ₹2,113 crore from Idea over its own one-time spectrum charges dues,” sources said. Sources said there is no clarity on how much would be the ‘final amount’ DoT may demand from the companies and it may be doing final calculations. The Department had recently sought legal opinion from the ASG in respect of the merger of Vodafone and Idea on whether “it would be legally tenable to raise a fresh demand upon transferee company (Idea Cellular) in respect of the differential between the entry fee and the market determined price for 4.4 MHz spectrum, administratively allocated to the transferor company (Vodafone Mobile Services),” in respective licensed areas from the date of NCLT’s approval. It had also sought on whether raising a fresh demand upon transferee company will amount to ‘wilful disobedience of court and may result in contempt of court’.

COMMENT NOW