At what is an inconvenient time for the beleaguered Vodafone Idea, to say the least, the Indian Department of Telecommunications (DoT) has issued notices to Vodafone Idea and fellow operator Bharti Airtel telling them to pay massive fines related to the flouting of licence conditions.
To make things even worse the DoT has given the companies three weeks to pay the penalties. Airtel has been told to pay Rs1,050 crore (about $141.7 million). Vodafone Idea has to pay Rs2,000 crore (about $269.9 million). The Idea fine is in fact two fines combined as the alleged offenders are the two units that become Vodafone Idea in 2018.
The fines were recommended by the Telecom Regulatory Authority of India (TRAI) after Vodafone India, Idea Cellular and Bharti Airtel were accused of violating licence conditions over quality of service by not granting adequate points of interconnection (PoIs) to Reliance Jio in 21 circles (administrative sub-districts) each.
PoIs are part of the process of allowing voice calls to go through from one network to another. In this case, the calls were from Reliance Jio’s network to those of Bharti, Idea and Vodafone.
The DoT accepted the regulator’s recommendations in June 2019 but had not served the notices until now. According to Indian press reports TRAI’s October 2016 ruling argued that the actions of the three operators appeared to be aimed at stifling competition and were “anti-consumer” and “against public interest”.
At the time TRAI even suggested that the three operators deserved to have their licences revoked but, to avoid inconveniencing customers, it suggested high financial penalties instead,
Vodafone had taken action in the Supreme Court against TRAI’s recommendations, a case that is apparently ongoing.
What that means for the three-week deadline isn’t clear but for a company that already owes the Indian government tens of billions of dollars, potential extra outgoings can’t be welcome news.
Shareholders seemed to agree. Vodafone Idea shares fall sharply after the DoT penalty news, as did those of Airtel.