DoT throws out RCom’s complaint against Vodafone

The Indian Department of Telecommunications (DoT) has rejected a complaint made by Reliance Communications (RCom) over unfair treatment on spectrum charges.

The unfair treatment in question is bank guarantees requested by the DoT towards the market value of its allotted spectrum before sharing its airwaves with Reliance Jio and Infocomm, as per spectrum-sharing rules.

In the compliant made by RCom on 10 July, the company said that while the ministry was trying to enforce the rules of the market, a similar claim was not made during Vodafone India’s merger with Idea Cellular.

The DoT rejected the compliant with a DoT official telling The Economic Times of India: “This cannot be equated with the demand sought from Vodafone Mobile Services Ltd. and Vodafone India since the companies are undergoing a merger with Idea Cellular. Therefore, the rules of merger and acquisitions apply, which are different.”

According to those close to the matter Vodafone was charged one time spectrum fees of Rs 9,000 crore ($1.3 billion) while RCom is being made to pay Rs 6,600 ($972 million) in cash with an additional Rs 2,000 ($292 million) in bank guarantees in 2015, in 2016 RCom paid the bank guarantees but this was later contested at the telecom tribunal.

Last week, the Telecom Dispute Settlement and Appellate Tribunal (TDSAT) instructed the DoT to release the funds paid as part of the bank guarantees, a fact that the DoT said it was going to challenge in Supreme Court.

In its letter RCom said: “We request DoT not to adopt such discriminatory, inconsistent and unfair stand against RCom as compared to a completely opposite and favourable stand for Vodafone and to instead release the bank guarantee of Rs 2,000 crore immediately without filing special leave petition on this matter before SC.”

In addition, DoT official said that in line with the country’s M&A rules, the new entity formed once the merger is complete, which will be Idea, will have to pay the one-time spectrum fees of the company being acquired. But the telecom tribunal has halted Vodafone’s charges for the time being and therefore the DoT has not issued the demand.

One-time spectrum charges are levied to cover the difference between the market price of non-allocated spectrum and the entry fee paid at the time of allocation.