The DoT will insist on bank guarantees for OTSC dues because of the telecom mergers and acquisitions rules currently in place, even though license fee, SUC and OTSC are legally challenged
As a pre-condition to clear the merger, the Department of Telecommunication (DoT) will soon ask Vodafone India and Idea Cellular to pay bills worth USD 3 billion (approximately Rs 18,870 crore) in relation to pending license fees, spectrum usage charges (SUC) and one-time spectrum charges (OTSC), Economic Times reported.
Idea’s licence fees and SUC dues amount to roughly Rs 7,625 crore, while OTSC charges are Rs 2,113 crore. Vodafone India has to pay Rs 5,532 core for the licence fee and SUC dues, with Rs 3,600 crore as OTSC dues.
The government will not be able to make either of the telecoms pay the licence fees or SUC dues by force, since this is regarding computation of a telecom’s adjusted gross revenue (AGR), and it has been under dispute for more than a decade and is subjudice, according to an executive of one of the companies.
A DoT official, however, said the department will shortly be sending demands to both companies for approximately Rs 19,000 crore.
The DoT will insist on bank guarantees for OTSC dues because of the telecom mergers and acquisitions rules currently in place, even though license fee, SUC and OTSC are legally challenged.
AGR is revenue generated from licensed services and a telecom operator usually pays 8 per cent of AGR as license fee and 5 per cent as SUC.
Since it will be the licensee after the merger, Idea Cellular is in discussions with DoT on behalf of itself and Vodafone both, to figure out the total dues to be paid before the merger, and is seeking approval of 100 per cent foreign direct investment in the company, a DoT official told ET.Sources have said since Vodafone as an identity will not exist after the merger, it is imperative that it pays the OTSC dues to DoT at the earliest, while Idea will be allowed to submit bank guarantees equivalent to its bills.