New Delhi: The department of telecommunications (DoT) has accorded conditional approval to the merger between Bharti Airtel Ltd and Tata Teleservices Ltd, subject to Airtel providing bank guarantees of up to 8,500 crore.

Bharti Airtel, however, plans to move the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) seeking a stay on the DoT order. “DoT has raised the demand for bank guarantees to cover for one-time spectrum charges as part of the merger. While 7,500 crore will cover dues relating to Tata Teleservices Ltd, the balance accrue from Tata Teleservices (Maharashtra) Ltd," one person aware of the development said, requesting anonymity.

An email query to Bharti Airtel remained unanswered till press time.

One-time spectrum charges are payable by companies wanting to convert their administered spectrum—spectrum not bought in an auction—to liberalized or auctioned spectrum. Auctioned spectrum can be deployed flexibly for any purpose, unlike administered spectrum.

Airtel had earlier moved TDSAT challenging a similar DoT demand during its merger with Telenor. The tribunal had subsequently ordered the government to clear the deal without demanding a bank guarantee. DoT had then challenged the tribunal’s verdict in the Supreme Court, which in May 2018, had dismissed the petition.

Airtel had also moved the tribunal for a similar demand by DoT for dues relating to its merger with Tikona Digital.

In October 2017, the Tata Group had announced that it would sell its consumer mobile business to Bharti Airtel on a debt-free, cash-free basis, except for a fraction of the unpaid spectrum fees that the Tata Group owes to the DoT.

Airtel will absorb Tata’s mobile phone operations in 19 circles, 17 under Tata Teleservices and two under Tata Teleservices (Maharashtra) Ltd.

The Airtel-Tata Tele merger will bolster Airtel’s spectrum footprint and 4G coverage, besides its ability to compete with rival Reliance Jio Infocomm Ltd. Airtel will get access to 178.5 megahertz (MHz) spectrum (of which 71.3MHz is liberalized or free to trade) in the 850MHz, 1,800MHz and 2,100MHz bands.

The transaction will also give Airtel the right to use part of the existing fibre network of Tata companies.