Govt approves Rs 3,050-cr fine on Airtel, Voda Idea; telcos may move court

Airtel and Vodafone Idea had recently concluded their rights issue to pare debt. They raised Rs 25,000 crore each from their respective offers.

The Digital Communications Commission (DCC) on Wednesday approved the recommendation of the Telecom Regulatory Authority of India (Trai) to levy a total penalty of Rs 3,050 crore on Bharti Airtel and Vodafone Idea for refusing to provide points of interconnection to Reliance Jio. The apex decision-making body of the telecom sector will now send its verdict to the Department of Telecommunications (DoT) for the final decision. The affected telcos are likely to move court once the DoT formalises the decision.

"After detailed discussions, it was decided that the DCC will accept the recommendations of Trai to levy penalty and recommend accordingly to the government," DoT Secretary Aruna Sundararajan told reporters after a meeting. The DCC comprises members from several key ministries and is chaired by DoT secretary.

Sundararajan retires end of this month and the final decision, which now rests with the DoT, may take some time, sources in the know said. The penalty on Airtel and Vodafone works out to Rs 1,050 crore each. In the case of Idea, it comes to about Rs 950 crore. Merged Vodafone Idea, however, would have to pay a penalty of Rs 2,000 crore.

An Airtel spokesperson, said the company was "extremely disappointed'' with the DCC move as the total number of PoIs provided were more than sufficient for the projections provided on the number of customers. "Upon receipt of the formal communication intimating the levy of penalty, we will approach the appropriate forum,'' he said, adding that the company has complete faith in the judicial process and the law of the land. Commenting on the DCC decision, Vodafone Idea said, "as India's leading telecom service provider, we abide by stringent norms of governance and compliance with all applicable laws and regulation while conducting our business in an ethical and conscientious manner. We will explore all options, including seeking legal recourse to protect our interests. While the DCC had agreed to impose a penalty on the incumbent telcos last month, it had asked the regulator to review the amount of penalty in view of the financial stress in the industry with an accumulated debt of over Rs 2 trillion.

Both Airtel and Vodafone Idea had recently concluded their rights issue to pare debt. They raised Rs 25,000 crore each from their respective offers.

It was way back in October 2016 that Trai had recommended imposing a total penalty of Rs 3,050 crore on Airtel, Vodafone and Idea (before merger) for allegedly denying inter-connectivity to then new player Reliance Jio. The regulator had stopped short of recommending cancellation of their telecom licences, saying it may lead to significant consumer inconvenience.

Trai's recommendation came after a complaint by Jio that over 75 per cent of the calls on its network were failing as incumbents were not releasing sufficient number of PoIs.

The case file

• In Oct 2016, Trai recommended imposing a total penalty of Rs 3,050 crore on Airtel, Vodafone and Idea (now merged) for allegedly denying inter-connectivity to Reliance Jio

• The penalty on Airtel and Vodafone works out to be Rs 1,050 crore each; in the case of Idea, it's Rs 950 crore

• Jio had complained that over 75% of calls on its network were failing as incumbents were not releasing a sufficient number of points of interconnection

• In Jun '19, the Digital Communications Commission sought Trai's views on revising the penalty, citing the "present financial health of the sector"