The Delhi High Court today said Idea Cellular’s merger with Spice Communications that took place in 2008 was being stayed due to 'fraudulent and incorrect information' given by the company. The order was passed after an application from the Department of Telecommunications (DoT).
The order was given without hearing what Idea had to stay.
Incidentally, the same high court had given an approval to the Idea and Spice merger last January.
"Idea will resist and not be bullied," the company said in a strongly worded statement. It is planning to challenge this order and take DoT to court. A company official said they were already working on it.
"If they had a problem with the merger they should have pointed out before they gave an approval. There is no logic in a stay now that the merger is done. Shareholders and investors will be affected," said the official.
Idea acquired 41 per cent stake in Spice Communications in June 2008. Both the companies had overlapping licences in six circles — Punjab, Karnataka, Andhra Pradesh, Delhi, Haryana and Maharashtra. The company had provided DoT with a plan of the proposed merger, also unconditionally offered to surrender overlapping licenses if policy so required.
Also Read
The company claimed not only did DoT delay the process of surrender, and has since been sending demand notices as penalty to holding extra spectrum, it has also since withheld the 3G spectrum in select circles.
"The inexplicable delay by the DoT in clearing the licence amendment has of course harmed Idea and consumer interest, but crucially has caused, and continues to cause, loss of crores of revenue to the exchequer every week. Apparently to cover its inefficiencies, the DoT is now indulging in duplicity and muscle flexing," said the company's statement.
Idea said it had updated DoT at every step, through more than a score of letters and meetings over the last three years. After the merger, the company was advised by the department to obtain necessary court approvals, and then approach the DoT for merger of licences, according to the policy. The policy, too, says in such a case overlapping licences have to be surrendered, since neither the licences nor spectrum were ever used.
"Both Idea and DoT acted as such, but when Idea approached the DoT for licence amendment after the court's approved merger, the DoT exhibited incoherence at first, and lately high handedness by way of selectively withholding 3G spectrum, issuing showcause and demand notices, and now obtaining an ex parte order on a merger approved over a year ago," said the company's statement.
Idea also said they had never even sought a refund of the entry fee they had paid for these licences, amounting to Rs 843 crore.
Idea and DoT have been fighting the same case of overlapping licences in telecom tribunal, TDSAT. The additional solicitor general who was representing the ministry in the case had suggested cancellation of Idea’s overlapping six licenses and imposition of penalty, alleging that it violated cross-holding norms by holding more than 10 per cent stake in another licencee company.