An internal review committee set up by the Department of Telecom has upheld an earlier decision to impose a penalty on Idea Cellular for allegedly violating licence conditions while merging operations with Spice Telecom’s cellular licences.

The internal committee has proposed to impose a penalty of Rs 600 crore on Idea Cellular for the alleged violation.

The case dates back to 2008 when Idea Cellular acquired Spice Telecom’s operations, including licences held by Spice for six circles, two of which (Punjab and Karnataka) were commercially operational. Idea too had been awarded licences for all of those six circles and had spectrum in five, including Punjab and Karnataka.

This overlap of licence areas was the root cause of the problem. Under licence rules, an operator cannot own stake exceeding 10 per cent in another operator in the same circle.

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

The Delhi High Court had earlier stayed the merger between Idea Cellular and Spice Telecom on a complaint filed by DoT.

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 for 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.

>thomas.thomas@thehindu.co.in

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