TDSAT rules in favour of Sistema, strikes down DoT’s contiguity charges

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New Delhi: The Telecom Disputes Settlement and Appellate Tribunal has ruled in favour of Sistema Shyam Teleservices Ltd (SSTL) in a case regarding contiguity charges the telco would have had to pay on account of the department of telecommunications (DoT) changing pre-existing auction rules.

The DoT had not issued a notice for payment to the company, but had not allowed the company to get the necessary contiguous spectrum, as allowed in the original rules.

The tribunal ruled that while the government was under no contractual obligation to allow spectrum contiguity, SSTL’s right to seek reconfiguration of its spectrum under NIA (notice inviting applications) remains intact and the government is contractually bound to allow contiguity to SSTL on the same terms as allowed to Reliance Jio Infocomm Ltd.

The case relates to the 800 MHz (megahertz) spectrum acquired by SSTL in the 2013 auction, in eight circles—Delhi, Gujarat, Tamil Nadu, Uttar Pradesh (East and West), Kerala, Karnataka and Kolkata. As per the NIA for that auction, winning bidders were allowed to rearrange exact frequencies amongst themselves, without any additional charge being levied. The NIA is the legally binding document that lays out all the relevant rules governing the spectrum auctions.

After the auctions, SSTL applied for making the spectrum it won contiguous, which significantly increases the efficiency of the airwaves, and allows the telcos to use newer communication technologies.

Rather than approving the application, the DoT changed the clause for the 2015 spectrum auction, saying that winning bidders would be charged the differential between the latest auction price and the auction where they won the spectrum, on a pro-rata basis for the remaining period of validity.

This would have meant a payout of as much as Rs.3,500 crore.

“By introducing clause 3.10 in NIA 2015, DoT has acted in an arbitrary and discriminatory manner and has attempted to defeat SSTL’s contractual rights under NIA 2013 with retrospective effect,” SSTL’s petition to the TDSAT said.