Telecom Lead India: Will DoT slap penalty of Rs 1,000 crore on Vodafone and Idea Cellular for violating 3G roaming guidelines?
On Friday, the department of telecommunications (DoT) asked Vodafone and Idea Cellular to pay a penalty of Rs 50 crore per circle for offering 3G services through roaming pacts.
Vodafone offers 3G in 9 circles using the 3G roaming pact, while Idea Cellular provides 3G services in 11 circles.
Mobile phone companies are expected to challenge the DoT’s notice in court next week. They have 60 days to respond, and the notice adds that the Centre may cancel their 3G permits if the government is not satisfied with the replies furnished by them.
If the government cancels the 3G license, it will be a big blow on struggling telecom operators.
For instance, Airtel’s 3G user base stands at around 5.4 million out of its 185 million mobile customers as on September 30, 2012. Out of 5.4 million active 3G users, Airtel’s active 3G data are only 4 million.
Airtel’s data ARPU during the second quarter of 2012-13 was Rs 43, helped by average data download of 133 MBs per user per month, and blended data realization rate of 32.4 paisa per MB. Airtel had 40.6 million data (Mobile Internet) customers, of which 4 million used 3G services.
Bharti Airtel, Vodafone and Idea had won 3G spectrum in 13, 9 and 11 circles, respectively, in 2010 via auctions and their intra-circle roaming pacts ensured that customers could access data services on a pan-India basis.
The telecom department had slapped a similar notice on Airtel in September 2012. But in October, the Delhi High Court offered relief to Airtel and granted a stay on a government order seeking that the company stop offering 3G services via roaming agreements.
In December 2011, the telecom department asked these telcos to stop offering of 3G services through roaming pacts outside the licensed zones and the government termed such agreements as illegal. Operators challenged the order before the telecom tribunal, TDSAT, which in July gave a split verdict. These telcos argued that DoT had told them that intra-circle roaming would be allowed before they participated in the 3G auctions of 2010.
The DoT in its latest notice to Vodafone, Idea Cellular, Aircel and Tata Teleservices issued on Friday has said that the split opinion of the tribunal only confirms the validity of the department’s letter to mobile phone companies in December 2011 directing that roaming pacts to be scrapped.
Post the tribunal’s split verdict, the Additional Solicitor General of India, in his opinion had said that fresh show-cause notices could be issued for imposition of penalty, including cancellation of licence. Further, revenue generated through unfair means can be recovered through separate showcause notices, the opinion added.
Tata Teleservices and Aircel had also forged a similar 3G roaming agreement, but called off the alliance after DoT began investigating these arrangements in late 2011.