Vodafone India has moved the Telecom Dispute Settlement Appellate Tribunal (TDSAT) against the Rs 50-crore penalty imposed by the Department of Telecom.
The DoT had slapped a Rs 50 crore penalty on Vodafone for its distribution deal with Matrix Cellular. According to the DoT, Matrix Cellular took bulk connections from Vodafone and then resold it to individuals with their own tariff plan, billing and without verifying the subscribers.
The TDSAT reserved its order after hearing Vodafone's plea.
10,145 connections
The case dates back to 2007 when the Telecom Enforcement & Resource Monitoring (TERM) cell of the DoT found that about 10,145 connections in Delhi were working under Matrix Cellular. These connections were taken from Vodafone but according to the DoT during investigation the company kept the details hidden.
“It was found out that Matrix Cellular rented out SIM cards out of bulk connections taken from Vodafone, used its own customer application forms, used its own tariff, hidden subscriber details base information from TERM cell Delhi, not followed the instructions of DoT for subscriber identity verification,” the DoT penalty notice issued to Vodafone stated.
The DoT added that during investigation it was found that Matrix was offering connection under its own tariff plan which is not allowed under existing rules. “While examining the tariff rate, it was found that the tariff plan was not in accordance with TRAI regulations and did not match with any tariff plan filed by Vodafone,” the DoT said.
For example, STD rates on Matrix connections were 75 per cent higher than the tariff submitted by Vodafone.
The DoT said that arrangement between the two companies caused losses to the national exchequer as Matrix was collecting money from subscribers but the same was not reflected in Vodafone's income while paying revenue share to the Government.
“In principle, the money being collected by Matrix should have been reflected in the revenue of Vodafone Essar which should be taken into consideration for adjusted gross revenue purpose thereby causing a loss in revenue to the Government,” the DoT notice said.
Show-cause notice
The DoT added that Vodafone has violated licence conditions and never checked the bonafide use of the rented subscribers and hence failed to detect misuse. The Department had issued a show cause notice to the companies but their responses were found to be unsatisfactory.
When contacted a Vodafone spokesperson did not comment but industry sources said that the company is likely to challenge the penalty in the telecom tribunal.
Over the past six months, the DoT has issued penalty orders on a number of operators for alleged violations committed over the past six years.
The industry had earlier raised concerns about this and sought a scientific method for calculating the penalty based on the level of violation.