DoT Likely to Seek Liberalisation of Vodafone Spectrum by Idea Cellular

In a new update, DoT has directed that Idea Cellular, before heading towards the merger with Vodafone India, will have to liberalise the administratively-allocated spectrum held by Vodafone, worth about Rs 45 billion. Liberalising of the spectrum will mean that the telco will allow to use every technology like third-generation (3G) or 4G services. The direction to liberalise the spectrum held by Vodafone India comes from merger and acquisition guidelines. For this Idea Cellular will have to pay the market price for 4.4 MHz of airwaves allocated administratively or will have to surrender these to the government. As for Idea’s own administered spectrum above 4.4 MHz, the telco will have to issue a bank guarantee. However, things can change as pertaining to Idea’s own spectrum the telco can resist the bank guarantee demand for its spectrum as Supreme Court had dismissed a plea of DoT for a one-time spectrum charge on airwaves above 4.4 MHz allocated administratively, in the recent Airtel-Telenor merger.

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As per Business Standard report, sources aware of the matter say that liberalisation for both the telcos could cost Rs 50-60 billion. Also, the telcos asked for DoT’s final approval on the merger last week. In the meanwhile, DoT is also on the task of calculating how much charges are being levied on the telcos, for which the department is going to raise demand by Wednesday. However, there is also some speculation that DoT’s demand of liberalising Vodafone’s administered spectrum could be resisted in the court.

Although it is established that if a demand by DoT is not raised by May 30 or May 31, then Idea might have to pay whatever is asked of it. However, it is the telco’s thought that DoT’s demand will only be justified in circles where the validity of licence will increase after the merger.