Vodafone gears up to challenge fresh spectrum fee demand

British telecom major Vodafone, which is in the midst of a merger plan with Indian telco Idea Cellular, has decided to challenge any further spectrum fees demand from the telecom department in relation to one of its earlier subsidiary merger issues, sour­ces said.

The company would approach court if the telecom department seeks to impose Rs 4,700 crore one-time spectrum charge (OTSC) over a 2015 sub judice case, where Vodafone had merged its seven subsidiaries into itself and under the Supreme Court instructions had paid Rs 2,000 crore at that time out of a demand of Rs 6,700 crore to clear the merger with Idea, sources said. The remaining amount is still under legal dispute with the telecom department.

If the company is asked for an undertaking, it can still consider the issue, they added. The telecom department has so far not raised this demand on Vodafone.

If the demand is raised, it will highlight charges levied in 2015 during the merger of Vodafone’s five India-based business units into one company. At that time the telecom department had demanded Rs 6,700 crore for charges related to spectrum, in addition to other regulatory costs, which led to a protracted legal battle.

The Supreme Court later ordered that Vodafone sho­uld pay Rs 2,000 crore as an interim payment to get the deal through. Vodafone-Idea has missed its internally set deadline of June 30, 2018 for the merger.

The remainder was said to be subject to further court action as the telecom depa­rtment reserved the right to challenge the fee any time.

Once complete, the merger of the second and the third largest operators in India will create a new market leader by subscriber numbers.