DoT now eyes the Idea-Spice Mobile Deal
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The Department of Telecom (DoT) folks have been having numerous sleepless nights lately, with all the activity that has been happening in the telecom industry of India.
A lot has been happening between India’s GSM players, foreign players interested in the growing Indian market, Telecom Regulatory Authority of India (TRAI) and the CDMA players.  DoT has already had to take some important decisions related to the 3G spectrum auction. It has already allowed international players into the auction and doubled the reserve price for the WiMax auction, which we have already covered earlier.
Now, the department is eyeing the recent Idea-Spice Mobile deal. Business Standard reports that according to DoT, the deal violates major clauses in intra-circle and mobile license conditions. On April 22, 2008, the merger and acquisition guidelines were revised, now disallowing mergers of mobile operators that operate in the same circle.
Thus, effectively, Spice, which currently operates in Karnataka and Punjab cannot merge with Idea Cellular, which provides GSM services in these two circles from January this year. Other circles that these providers hold licenses for include Delhi, Andhra Pradesh, Haryana and Maharashtra.
The deal between the two providers was announced on June 25, when industrialist B K Modi’s 40.8 percent stake in Spice was acquired by A V Birla group which has a majority stake in Idea Cellular. DoT officials also claim that the deal violates a ’substantial equity’ clause of telecom license, which disallows an operator to have more than 10 percent share in another operator of the same circle.
Idea is also expected to make an open offer, along with Telekom Malasia, to acquire a additional 20 percent share in Spice for Rs. 1000 crore.
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