SC has posted the matter for July 8. (PTI )
SC has posted the matter for July 8. (PTI )

Centre moves SC over DoT demand in Tikona-Airtel merger

  • The National Company Law Tribunal in July 2018 approved the merger between Bharti Airtel and Tikona
  • A bench comprising Chief Justice Ranjan Gogoi and Justices Deepak Gupta and Aniruddha Bose took note of the plea by the Department of Telecom

NEW DELHI : The central government on Wednesday moved the Supreme Court against the TDSAT order that stayed the Department of Telecommunications’ (DoT’s) demand of 1,627 crore for allowing the merger of Bharti Airtel with Tikona Wireless.

A bench comprising Chief Justice Ranjan Gogoi and Justices Deepak Gupta and Aniruddha Bose took note of the plea by the DoT for an urgent hearing and posted the matter for July 8.

“...Accordingly, we direct the authorities concerned of the Union of India to take the merger of two companies and licence on record, subject to the under mentioned conditions and the final result of this petition… This interim order shall govern the parties till it is vacated or modified after considering any further or new material, which may be brought on record on behalf of the respondent," reads the TDSAT order.

The DoT had in a letter dated 17 August, 2018, asked Bharti Airtel Ltd to pay in cash and through a bank guarantee a total of 1,626.89 crore to clear the merger with Bharti Digital Networks (formerly known as Tikona Digital Networks). Airtel had, however, approached the Telecom Disputes Settlement and Appellate Tribunal (TDSAT), seeking a stay on the DoT demand.

The DoT had asked Airtel to pay 185.62 crore in cash. This is the difference between the entry fee payable for a 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 the unified licence in the 2300 MHz band.

This payment would enable Airtel to also provide voice services using spectrum in the four circles. Tikona has 20 MHz spectrum in these circles and the Rajasthan circle.

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.

The DoT’s merger and acquisition guidelines state that 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 DoT for one-time spectrum charges shall be submitted by the 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 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 roll out 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.

After completion of the deal, Airtel will have 30 MHz in the 2300 MHz band in 13 circles, enabling it to better handle surging data demand.

Apart from the above two demands, the DoT had also sought Airtel be made responsible for clearing all demands that may be raised by any wing of the department, including penalties imposed on Tikona or Airtel, apart from submitting an undertaking to meet payments that are sub judice, depending on the outcome of the case.

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