Wednesday, October 20, 2021
HomeMarket Live UpdatesAirtel, Vodafone Idea shares fall sharply after DoT penalty news

Airtel, Vodafone Idea shares fall sharply after DoT penalty news

Shares of and fell sharply in early trade on Friday on news that the Department of Telecommunications (DoT) has issued notices to them to pay Rs 3,050 crore in cumulative penalties within three weeks for flouting licence conditions by denying Reliance Jio Infocomm adequate points of interconnection (PoIs) in 2016, which affected the quality of services.

In morning trade, Vodafone Idea was trading 3.2% lower at Rs 11.52, off an intraday low of Rs11.40, while the Airtel stock was 1.6% down at Rs 677.40, having touched a low of Rs 674.55, on the BSE.

“The DoT has given the companies three weeks to pay the penalties,” a person familiar with the matter told ET. Airtel has to pay Rs 1,050 crore and Vodafone Idea has to pay Rs 2,000 crore.

The Telecom Regulatory Authority of India (Trai) had recommended fines of Rs 1,050 crore each in 2016 on Vodafone India and Bharti Airtel for violating licence conditions over quality of service by not granting adequate PoIs to Jio in 21 circles each.

Idea Cellular was fined Rs 950 crore for flouting rules in 19 circles. PoIs are required for voice calls to go through from one network to another – in this case, from Reliance Jio’s network to those of Bharti, Idea and Vodafone.

Vodafone and Idea merged in August, 2018. The DoT accepted the regulator’s recommendations in June 2019 but had not served the notices till now.

“We are deeply disappointed with the arbitrary and unfair demand based on Trai recommendations of 2016 relating to provisions of point of interconnect to a new operator,” an Airtel spokesperson said in a statement. “These allegations were frivolous and motivated. Bharti Airtel takes pride in maintaining high standards of compliance and has always followed the law of the land. We will challenge the demand and pursue the legal options available to us.”

Vodafone Idea did not respond to queries.

This follows the government’s mid-September announcement of wide-ranging reforms to provide relief to the debt-laden telecom sector and preserve a three-private player market. It announced a moratorium of four years on payment of government dues such as adjusted gross revenue (AGR) and spectrum payments, among other major relaxations.

The demand notices–which adds to Vodafone Idea’s statutory dues of over Rs1.6 lakh crore–were issued on the day telecom secretary Anshu Prakash demitted office. New telecom secretary K Rajaraman assumes office today.

After a bitter public fight over grant of PoIs between Jio and incumbents Vodafone, Idea and Airtel in the lead up to the commercial launch of the Mukesh Ambani-owned telco, Trai had in October 2016 ruled that the actions of Airtel, Vodafone and Idea appeared to be aimed at “stifling competition” and were “anti-consumer” and “against public interest.” It had said that the three telcos deserved to have their licences revoked – the severest action that the authority could take – but, keeping in mind consumer inconvenience, it suggested the highest financial penalties of Rs50 crore for each circle.

At the time, Airtel, Vodafone and Idea had rejected Trai’s findings, saying they had not violated any rules. Vodafone had moved the Supreme Court against Trai’s recommendations. That case is ongoing.

As reported by ET on August 1, 2019, the penalties had split even the Digital Communications Commission (DCC) – the highest decision-making body in the DoT. But the DCC then went with the majority verdict and backed the Trai recommendations.

Two of the seven members opposed the levy with one instead arguing that the penalty should instead be levied on Jio. Another member had suggested that the blow to Airtel and Vodafone Idea should be softened by allowing them to spread the payment over 15-20 years while allowing for a moratorium.

The DCC has the telecom secretary as chairman while other members include the Ministry of Electronics & Information Technology (MeitY) secretary, Niti Aayog chairman, secretary, ministry of finance and DoT officials.

The demand notices also come as the government is working on another relief package essentially to leave more resources in the hands of telecom operators so that they may go global. The telecom and IT minister Ashwini Vaishnaw had in an interview to ET said the government would do whatever it takes to strengthen the telecom sector.

Source link



Please enter your comment!
Please enter your name here

Most Popular

Recent Comments