In a move that will ease mergers and acquisitions within the telecom industry, the Supreme court quashed the telecom department’s bid to make Bharti Airtel furnish a bank guarantee of Rs 1,499 crore as a pre-condition for approving Airtel’s acquisition of Telenor India. The order has cleared the path for the Bharti Airtel-Telenor deal to go through. The apex court in its order on Wednesday dismissed Department of Telecommunications (DoT) petition challenging Telecom Dispute Settlement and Appellate Tribunal’s (TDSAT) April 12 order directing DoT to approve Airtel-Telenor merger without requiring the latter to first furnish bank guarantee.
“The Special Leave Petition is dismissed. Pending application(s), if any, stands disposed of accordingly,” Justices SK Sikri and Ashok Bhushan said in their order on Wednesday, reports ET.
DoT was seeking a bank guarantee from Airtel up to Rs 1,499 crore towards one-time spectrum charges (OTSC) allocated to the carrier without auctions. Another Rs 200 crore was also demanded for deferred payment of the spectrum owed by Telenor, before approving the deal.
Having paid Rs 200 crore due on Telenor India’s airwaves, the Sunil-Mittal led telco moved TDSAT against DoT’s demand of OTSC, saying the issue of one-time spectrum charge is pending in the courts.
On April 12, TDSAT had ruled in favour of Airtel directing DoT to clear the deal with Telenor without any bank guarantee. DoT then challenged the TDSAT order in Supreme Court on May 3.
The deal has already been cleared by Competition Commission of India, Securities and Exchange Board of India and National Company Law Tribunal. The last approval had to come from DoT.
With Supreme Court ruling, the last hurdle in the approval of the deal has been removed, and Airtel-Telenor deal is expected to be approved within a week, according to sources close to ET.
“The consequence is that the deal will go through immediately,” a lawyer told ET who was present during the proceedings in the apex court, which began last week when the government moved court. Bharti Airtel, however, did not comment on the development.
“We will attempt to clear it (the deal) within this week,” a senior official in DoT said.
Post-approval, Airtel will buy out operations of Telenor in a no-cash deal while taking over its spectrum liabilities of Rs 1,650 crore. The deal will give Airtel access to 43.4 MHz spectrum in the 1800 MHz band in seven circles and about 40 million users. The agreement between the two firms was signed last year in February.