DoT seeks law mins opinion on Uninor licence amalgamation

Written by Anandita Singh Mankotia | New Delhi | Updated: Sep 30 2011, 07:11am hrs
The department of telecommunications (DoT) has sought the law ministrys opinion on whether the amalgamation of Unitech Wireless eight unified access service licences into one is in compliance with the licence conditions.

Unitech Wireless is one of the nine companies to be awarded licences by former telecom minister A Raja in 2008. Norwegian telecom operator Telenor holds 67.25% stake in it and the company trades under Uninor brand name. Unitech Wireless had applied for 2G licences under eight companies and then merged the entities. The amalgamation was approved by the Delhi High Court but the DoTs says it should have taken its permission prior to the merger as is required.

On whether the company fully complied with the licence conditions regarding sale of equity, paid-up equity and net worth requirements at the time of amalgamating the nine circles into one, views of the ministry of corporate affairs will be sought, according to an internal communication of the DoT.

The DoT has asked the company to furnish the net worth, authorised and paid-up capital details at the time of amalgamation, which Uninor is in the process of obtaining from its auditors.

The DoT note says in bypassing the government, the company violated Clause 6.1 and Clause 6.2 of the UASL which mandate a company to first receive an approval from the licensor (DoT), especially if the amalgamation is in overlapping circles.

The note has enlisted other alleged violations made by the company: the UAS licences of some of the Unitech companies were not even three years old at the time of the amalgamation so as per the three-year lock-in, during which no merger is allowed, it is seen as a violation.

However, Uninors view is that it did no wrong as amalgamating different licences held by one company is different from the merger of licences held by two distinctly different companies. According to company officials, a merger requires prior permission of the DoT but not an amalgamation as was done by Unitech Wireless. This becomes important as the DoT has drawn a parallel between the Idea-Spice merger to explain violation on the part of Unitech Wireless.

As the request of Idea Cellular for transfer of licences held by Spice Communications was in violation of various licence conditions and merger guidelines, this department imposed financial penalties and show-cause notices to the company for the termination of licences held in six overlapping areas .... The persmission of the prior approval of the DoT is of utmost importance when some of the licences are not three years old. In this case, Unitech Wireless (TN) has not taken the prior approval of DoT before filing the petition in the High Court.

In case of Unitech Wireless, the issue of overlapping of licences does not arise.