Vodafone Idea Sends Letter to DoT Asking to Recalculate Spectrum Prices

Newly merged company Vodafone Idea Ltd drafted and sent a letter to the Department of Telecommunications (DoT) urging the authorities to recalculate the spectrum costs which the company had paid to get the merger cleared. To recall, Idea Cellular and Vodafone India had to pay up a sum of Rs 3,926.34 crore in cash to get the merger cleared from DoT. However, now the company is of the view that it was overcharged for the spectrum prices.

vodafone-idea-dot-spectrum

Discrepancies in Calculation of Charges: Vodafone Idea

An anonymous tip from a DoT official said, “They brought up a difference of opinion with DoT on indexation charges and prices they paid for spectrum in certain circles like Himachal Pradesh, Tamil Nadu and Bihar.” ET reported. When the airwaves are issued at government decided prices instead of an auction, indexation is done to bring the amount of spectrum to the current market price. Going by the books, it’s essential for the companies to liberalise their non-auctioned spectrum by paying the difference between the amount paid at the time of airwave allocation and the current market price for them to go through the merger.

The newly merged company also highlighted that there are discrepancies in the calculation done by the DoT since the department had calculated twice for spectrum related dues for Chennai and the rest of Tamil Nadu. Vodafone Idea argued that since the rate would depend on population, it wasn’t possible for the two numbers to be similar.

DoT Assures Diligence on Calculation

In reply to Vodafone Idea’s allegations, DoT official said, “We will look into this, but for us to give any further recommendations, we will also have to see calculations that have been done in case of other mergers.” As per the experts now, the matter is expected to escalate to the telecom tribunal and then onto Supreme Court for resolution.

Matter Likely to Escalate to Legal Battle

It’s noteworthy that the amount which Vodafone Idea Ltd mentioned in their letter is part of the bigger Rs 7,249 crore sum which the two companies had to pay to DoT as part of spectrum dues. DoT had put forth the condition for the approval of the merger, thus forcing the hands of the company to follow through.

Out of the total amount, the two companies paid Rs 3,926.34 crore in cash whereas the rest of the amount was furnished as bank guarantees, finally paving the way for the biggest M&A deal in the country which finalised on August 31st. However, the operator had paid the amount “under protest” meaning that it would contest the demand for One Time Spectrum Charges (OTSC) later in the telecom tribunal.

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Arpit spends his day closely following the telecom and tech industry. A music connoisseur and a night owl, he also takes a deep interest in the Indian technology start-up scene and spends rest of his time spilling poetry and stories on paper.

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SACHINNikhil Mumbai-PuneRohitMahesh SharmaSudhakar Recent comment authors
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Sudhakar
Sudhakar

Vodafone anf idea must shutdown 2G and improve the the vodafone 3G and 4G & idea 4G coverage and the bands.

3G and 4G must be kept alive by all the operators.

An illiterate is posting against 3G here.

Chetan | Bangalore
Chetan | Bangalore

#BREAKING , Just recieved info from Vodafone idea Ltd. ::::Company leadership team is working on robust network planning and growth strategy for the company ahead and will be released to media/public in November … hence don’t loose hopes even if network ucks now…. Stay tight and have patience is the message from management to its employees and customer….

Nikhil Mumbai-Pune
Nikhil Mumbai-Pune

From where you got this information?

Nikhil Mumbai-Pune
Nikhil Mumbai-Pune

Ideally they should deploy band 41 first wherever Idea/Vodafone 3G is available and then they can shut down 3G to use it for 4G and VoLTE. Later they can shut down 2G on 900Mhz and can use it for 4G VoLTE and later by 2020 Match they can completely switch off 2G. They have advantage over Airtel(till next auction) There is no way other round to Vodafone-Idea. I don’t know what will be strategy for Jio and Airtel in next auction.

Nikhil Mumbai-Pune
Nikhil Mumbai-Pune

What’s your take on this?

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