DoT Seeks Clarity on Levying Fee on Airtel-ABSPL Merger

The Department of Telecom has sought legal opinion on levy of Rs. 436 crore one-time licence fee on an Airtel subsidiary, which got more 4G footprint through an acquisition and is now being merged with parent.

Airtel Broadband Services (ABSPL) holds broadband wireless access (BWA) spectrum in Delhi, Mumbai, Kerala and Haryana that can be used for 4G services and Airtel has proposed merger of this subsidiary with itself.

While an Airtel spokesperson declined to comment, a government official said: "The decision on merger will be taken based on legal opinion. There is complexity in it.

"ABSPL holds internet services licence which does not permit voice telephony. Airtel will operate under Unified Licence (UL) which allows all services. Clarity is required if ABSPL should be charged Rs. 436 crore migration fee."

Airtel had acquired Wiresless Business Services Pvt Ltd, a company founded by US chip maker Qualcomm, and renamed it as ABSPL.

"There is also clarity required if merger of ABSPL with Airtel will mean migration of an ISP licence holder to UL. As per terms and conditions of auction, companies were allowed to use BWA spectrum as per licence they hold but Airtel acquired a firm which has ISP permit and not the spectrum directly," the official said.

Sources cited the example of Reliance Jio Infocomm having paid Rs. 1,673.43 crore for shifting from internet service provider (ISP) licence to universal licence.

Pursuant to ABSPL merger, Airtel will have to surrender excess spectrum to comply with spectrum cap rule.

Under present spectrum rule, a company cannot hold more than 25 percent of total spectrum assigned to all companies in a circle and over 50 percent of total spectrum assigned in a particular frequency band.

The source added that as per present situation, Airtel may need to surrender some spectrum in Mumbai for which it will not get any refund or adjustment.