New Delhi: Telecom company Idea Cellular Ltd on Monday said it is scouting for partners to operate mobile phone services in Punjab and Karnataka, after the government asked the company to either surrender its licences for the two circles or those of its newly acquired unit, Spice Communications Ltd, to avoid overlapping.
“Policy is very clear. What will one do with two licences?,” a ‘PTI’ report quoted telecom secretary Siddartha Behura as saying.
“You need just one to offer the service. Obviously, Idea has to return one licence (in each circle) but there wouldn’t be any refund for this.”
The decision by the department of telecommunications (DoT) follows a letter from Idea Cellular in which it informed the government that it would file a restructuring plan in line with the companies law, creating a new entity to which a licence will be transferred.
Following norms: Managing director of Idea Cellular Sanjeev Aga. (Ashesh Shah / Mint)
“The transfer of the licence will happen pursuant to the said restructuring, to a transferee who is fully eligible in accordance with the eligibility criteria contained in the tender conditions for licence guidelines...,” Idea Cellular managing director Sanjeev Aga said in the letter.
“We will approach you with complete details shortly after concluding the signing of a definitive agreement with the transferee,” he wrote.
Analysts said Idea could surrender its own licences and retain Spice licences in both Punjab and Karnataka as Spice radio frequency, or spectrum, in the two states can accommodate more users. Spice is already offering services in the states, where Idea is yet to start operations.
Idea Cellular, which had acquired a controlling stake in Spice Communications in June for about Rs2,700 crore, had sought clarity on the licensing issues from DoT.
Meanwhile, analysts said that Idea Cellular could lose Rs300 crore in this process, bad news for a company that reported a fall of 14.7% in net profit to Rs263.1 crore in the first quarter of this financial year because of foreign exchange losses and higher interest charges, although revenue increased more than 47% on subscriber additions.
Idea holds spectrum for Mumbai, Bihar, Orissa, Tamil Nadu (including Chennai) and Karnataka, and licences for the remaining six circles.
On the Bombay Stock Exchange, shares of Idea Cellular lost 0.89% to close at Rs89.15.
PTI contributed to this story.