The department of telecommunications (DoT) has in a letter dated 17 August asked Bharti Airtel Ltd to pay in cash and through a bank guarantee a total of Rs1,626.89 crore to clear its merger with Bharti Digital Networks (formerly known as Tikona Digital Networks). Airtel has, however, approached the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) seeking a stay on the DoT demand.
DoT asked Airtel to pay Rs185.62 crore in cash. This is the difference between the entry fee payable for unified access service licence in the four telecom circles of Gujarat, Himachal Pradesh, Uttar Pradesh (east) and Uttar Pradesh (west) and the entry fee already paid by Tikona under unified licence in the 2300 MHz band.
This payment would enable Airtel to also provide voice services using the spectrum in the four circles. Tikona has 20 MHz spectrum in these circles and the Rajasthan circle.
“Bharti Airtel shall (also) submit bank guarantee towards one-time spectrum charges for ₹ 1,441.27 crore towards spectrum holding beyond 4.4 MHz (under the merger and acquisition guidelines),” the letter said.
Mint has seen a copy of the letter.
One-time spectrum charges are payable by companies that want to convert their administered spectrum or spectrum not bought in an auction to liberalised or auctioned spectrum. Auctioned spectrum can be deployed flexibly for any purpose, unlike administered spectrum.
Under the department of telecommunications’s merger and acquisition guidelines, if a transferor (Tikona) holds a part of the spectrum, which (up to 4.4 MHz) has been assigned against the entry fee paid, the transferee (Airtel), at the time of merger, shall pay to the government, the differential between the entry fee and the market-determined price of spectrum from the date of approval of such arrangements by the National Company Law Tribunal (NCLT) on a pro-rata basis for the remaining period of validity of the licence.
In respect of spectrum holding beyond 4.4 MHz, a bank guarantee for an amount equal to the demand raised by the department of telecommunications for one-time spectrum charges shall be submitted by transferee (Airtel), pending final outcome of the court case, according to the guidelines.
Bharti Airtel had in March 2017 entered into a definitive agreement with Tikona to acquire its 4G business, including the Broadband Wireless Access spectrum and 350 sites, in five telecom circles.
The National Company Law Tribunal in July 2018 approved the merger between Bharti Airtel and Tikona.
Airtel plans to rollout high speed 4G services on the newly acquired spectrum in the five circles immediately after the closure of the transaction.
The acquisition will boost Airtel’s spectrum position in Gujarat and Himachal Pradesh, taking its overall broadband wireless access spectrum holding to 30 MHz each in these circles.
Post completion of the deal, Airtel will have 30 MHz in the 2300 MHz band in 13 circles enabling it to better handle the surging data demand.
Apart from the above two demands, the department of telecommunications has also sought that Airtel be responsible for clearing all demands which may be raised by any wing of the department including the penalties imposed on Tikona or Airtel, apart from submitting an undertaking to meet payments which are sub-judice, depending on the outcome of the case.
Airtel has already approached TDSAT seeking a stay.
“The conditions are entirely contrary to the very guidelines, illegal, arbitrary, and contrary to the applicable order of this tribunal and other fora,” Airtel said in its petition. Mint has seen a copy of the petition.
“The issuance of the impugned conditions smacks of non-application of mind on the part of the respondent (DoT),” the petition read.
In a similar case, the tribunal had ordered DoT to clear the deal without demanding a ₹1,499 crore bank guarantee from Bharti Airtel for its acquisition of Telenor India. DoT had then approached the apex court, which dismissed its petition in May.
An email query sent to Airtel was unanswered till press time.
This article was first published on livemint.com