DoT Holds Up on Airtel’s Acquisition of Telenor India for Insisting on Bank Guarantees

A Telecom Tribunal order was passed before, that directed the Sunil Mittal led company Bharti Airtel to acquire Telenor India without relying and insisting on a bank guarantee of about Rs 1,700 crore. Putting that order in scrutiny, the Department of Telecom has finally moved to Supreme Court questioning the previous order of the tribunal. Interestingly, Airtel had already walked into the court beforehand expecting this move from the DoT and filed a caveat thus making their place in the case. This step ensured Airtel that it could partake in the case whenever the hearing started, which according to ET can happen in the coming next week. However, with these legal battles uprising slowly, the DoT’s approval for the Airtel-Telenor deal is bound to be postponed and delayed, a person tracking the developments said to the publication.

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DoT will go on filing a report in the Supreme Court in their April 24 edition. The matter surfaced when DoT had asked Bharti Airtel bring in a bank guarantee before moving forward with the acquisition in lieu of covering Rs 1,499 crore payment which was for one-time spectrum charges for airwaves allocated to Airtel and including that, there was also a Rs 200 crore component for spectrum payments which Telenor had pending on its part, but would need to make.

After challenging the demand of DoT, Airtel moved to the Disputes Settlement & Appellate Tribunal, which later directed the government to move ahead on the issue without asking for bank guarantee from the company. This delay is, however, pushing the Telenor India company towards different outcomes, for instance, a bankruptcy. The company has been slipping into the pits of losses more and more, with the losses running as high as Rs 4 crore a day, cumulative from six circles where Telenor is running its operations. These losses are further adding to the huge debt of Rs 6000 crore which the telco is already in. ??Airtel is trying to grab on the opportunity by trying to buy Telenor in a no-cash deal. With the war for market share by all the telecom operators and with the Idea-Vodafone merger in sight, this step will help Airtel further increase its subscriber base. However, even after Airtel gets hold of Telenor’s outstanding spectrum payments of Rs 1,650 crore, there’s no denying the fact that the Idea-Vodafone merged entity will be the biggest telecom giant in the country, on a lot of parameters.

Airtel, post the acquisition plans of getting hold of Telenor India’s 4G airwaves in the circles of Andhra Pradesh, Bihar, Maharashtra, Gujarat, Uttar Pradesh (East and West) and Assam. This will be in addition to the operational contracts, tower leases and about 40 million subscribers of Telenor, as estimated in January. It is noteworthy that Telenor has not yet commenced operations in Assam. The impending acquisition of Telenor by Airtel which has already been approved by the Competition Commission of India, Securities & Exchange Board of India, the stock exchanges and National Company Law Tribunal is now only awaiting DoT’s decision.

The Department of Telecom has the power to insist on bank guarantees, in lieu of their one-time spectrum charges in the events following up to any merger. This condition prevails even if the matter is in court.

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25 Comments on "DoT Holds Up on Airtel’s Acquisition of Telenor India for Insisting on Bank Guarantees"

 

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Ashok
May 5, 2018 12:16 pm 12:16 PM
If they would have adapt the technology,back 2011 4G was launched in UK,US the same Vodafone run 2G only in india,while they provide 4G in UK in those days,and at time even Mr. Ambani would not have thought of bringing Jio..these players stayed in India for more then 12-18 years and never make the basic 2G even proper.we are crawling with 2G and 3G is expensive..4G 1GB pack start with Rs 1,500 by Airtel..and yet Vodafone don’t have 4G available in every tower..idea have started late and will take time to catch..although airtel invest a lot and I can clearly… Read more »
Sudhakar
May 5, 2018 12:05 am 12:05 AM

Off topic :

Even BSNL itself will launch 4G before idea and vodafone gets merged actually.

tri_vis
May 5, 2018 10:54 am 10:54 AM

BSNL is launching 4G in Rajkot city of Gujarat in month end. And gradually launch in other cities of Gujarat.

Sudhakar
May 5, 2018 12:04 am 12:04 AM

Why is DoT screwing only airtel and not vodafone (tax scandal)?.

Anup
May 6, 2018 9:58 pm 9:58 PM

Airtel: indian
Vodafone: uk

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