Kumar Mangalam Birla, Chairman of the Aditya Birla Group, has written to Union Telecom Minister Kapil Sibal to resolve issues dogging the merger of his company Idea Cellular with Spice Telecom. Birla also wants Sibal to direct the Department of Telecom (DoT) to issue the seven licences that Idea Cellular had won in last November’s spectrum auction.
“Idea has invested a huge amount for GSM service roll out in these service areas and, in fact, our existing coverage is much higher than the licence mandated coverage. We seek your urgent intervention in issuance of licences for seven quashed service areas to Idea Cellular,” Birla wrote in a letter sent to Sibal on May 23.
Idea Cellular’s 13 licences were quashed by the Supreme Court as part of the 122 permits scrapped after the 2G spectrum scam broke out. Then, in November, the company bought back spectrum in seven circles for Rs 2,031 crore.
About the same time, Idea was faulted by the DoT for allegedly offering 3G services in areas where it did not own spectrum. Since the company has challenged the DoT’s order in court, the Department has held back the network’s licences in these seven circles.
Cross-holding norms
The other issue, relating to theIdea Cellular’s merger with Spice Telecom, dates back to 2008.
The DoT had then objected to the merger on the grounds that Idea had violated cross-holding norms i.e., a company cannot hold more than 10 per cent stake in another telecom company operating in the same circle.
The problem arose when the merger was being finalised. Idea Cellular won fresh licences in the same circles where Spice has been operating. This flouted the cross-holding norms. After the merger deal, Idea wrote to the DoT surrendering its new licences and asked that the entry fee it had paid be refunded. But the DoT delayed its decision.
Earlier this year, the DoT decided to clear the merger with Spice subject to penalties on Idea, but it hasn’t acted on this decision either yet.
This dispute has also held back Idea’s 3G launch in the Punjab circle as the DoT has declined to approve it till the merger issue is resolved. In his letter, Birla has said that the approval should be given to Idea in public interest.
Birla also wants the entry fee it paid for its quashed licences to be adjusted against the money it has to pay for its recently-acquired spectrum. Idea had paid Rs 1,168 crore for the quashed licences but DoT has set off only Rs 684 crore.