The Department of Telecommunications has moved the Supreme Court challenging a telecom tribunal order that directed the government to clear Bharti Airtel’s acquisition of Telenor India without insisting on a bank guarantee for almost Rs 1,700 crore.
Sunil Mittal-led Airtel had already filed a caveat in the apex court, anticipating the department’s move, to ensure that it is allowed to become a party to the case once the hearing starts. The case may come up for hearing next week, lawyers aware of the development told ET. The latest legal rumblings may further delay DoT approval for the Airtel-Telenor deal, said a person tracking the developments.
ET first reported DoT would file an appeal in the Supreme Court in its April 24 edition. DoT had asked Airtel to furnish the bank guarantee before clearing the acquisition to cover a Rs 1,499 crore component for one-time spectrum charges for airwaves allocated to Airtel and over Rs 200 crore for spectrum payments, which Telenor needs to make. The issue of one-time spectrum charges is in court.
Airtel challenged the telecom department’s demand by moving the Telecom Disputes Settlement & Appellate Tribunal, which ordered the government to clear the deal without demanding a bank guarantee.
The delay is said to be pushing Telenor’s India arm to consider filing for bankruptcy. Telenor India has reportedly been racking up losses of Rs 4 crore a day from operations in six circles, adding to its present debt of about Rs 6,000 crore.
Airtel plans to buy Telenor India in a no-cash deal and take over its outstanding spectrum payments of Rs 1,650 crore. The deal will help it narrow the revenue market share gap with the emerging Vodafone India-Idea Cellular combine, which will become the country’s largest phone company after their merger.
Airtel will get Telenor India’s 4G airwaves in Andhra Pradesh, Bihar, Maharashtra, Gujarat, Uttar Pradesh (East and West) and Assam, besides operational contracts, tower leases and about 40 million subscribers as of January.
Telenor hasn’t started operations in Assam. The Competition Commission of India, Securities & Exchange Board of India, the stock exchanges and National Company Law Tribunal have already approved the acquisition, and only the DoT needs to clear it.
The telecom department is allowed to insist on bank guarantees from telcos for their one-time spectrum charges in the runup to any merger, even if the matter is in court.
Source: Economic Times