India’s Idea hit with INR6 billion fine for Spice merger

Indian telecoms authorities have hit mobile operator Idea Cellular with a fine of INR6 billion ($97 million) for illegally merging with smaller rival Spice Communications, reports the Times of India.

According to press reports, India’s Department of Telecommunications (DoT) regarded the tie-up as a “willful” violation of certain licensing conditions preventing a telecoms company from owning more than 10% of another in the same service area.

Indian telecoms authorities have hit mobile operator Idea Cellular with a fine of INR6 billion ($97 million) for illegally merging with smaller rival Spice Communications, reports the Times of India.

According to press reports, India’s Department of Telecommunications (DoT) regarded the tie-up as a “willful” violation of certain licensing conditions preventing a telecoms company from owning more than 10% of another in the same service area.

Although it operates in a number of the same areas as Spice Communications, and was warned about the repercussions of a merger, Idea Cellular (Mumbai, India) went ahead and amassed shares in the company.

“Consequent upon the amalgamation, Idea Cellular was holding two licenses bundled with spectrum in each of the six circles in violation of the license conditions and the guidelines without the required approval,” said a DoT committee, according to the Times of India.

The DoT had already ruled the merger illegal and proposed a fine of INR3 billion, but the committee appears to have deemed that penalty somewhat lenient.

The case is the latest in a series of clashes between India’s mobile operators and regulatory authorities.

A number of major investors are still reeling from the cancellation in early 2012 of more than 120 telecoms licenses awarded during an auction in 2008.

Authorities claimed the auction process had been mired in corruption and that permits were awarded for just a fraction of their real value.

A number of operators were driven out of the market or forced to massively scale down the size of their Indian operations as a result of the move.

More recently, regulators have attacked operators for striking so-called ‘roaming pacts’, allowing them to offer 3G services in regions where they do not hold the requisite concessions.

Authorities claim the practice is in breach of licensing conditions, but several operators claim they were led to believe otherwise in advance of the 3G auction process.