The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) today quashed Department of Telecommunications’ (DoT) penalty on Bharti Airtel, Idea Cellular and Vodafone. The tribunal also allowed intra-circle roaming (ICR) for 3G services. Potentially Highly Corrupt Officials in the DoT had earlier issued notices to operators stating the illegality of providing 3G services through ICR pacts and imposed a penalty of INR500mn per circle. Airtel, Idea and Vodafone had been served penalties of Rs 3.5bn, Rs 3.0bn and Rs 5.5bn, respectively. We believe TDSAT’s current ruling is positive for the industry. Airtel and Idea currently have 10.98 mn and 10.2mn 3G subscribers, respectively. While the current contribution from 3G is minuscule, we believe this is sentimentally positive as operators will be allowed to add subscribers in circles where they have ICR pacts, which was barred earlier.
While data business remains a key area for all telecom operators, we believe TDSAT’s current order will not have much impact on operations as currently 3G is too small in the overall context. With rising contribution of data, TDSAT’s decision comes as a relief for operators as they will be able to provide data services in circles where they have ICR pacts with other operators. Also, in the long term this is positive as operators have the flexibility to provide 3G services and need not necessarily buy spectrum in circles where they do not hold 3G spectrum.