DoT likely to recommend licence cancellation of Idea and Spice

The Department of Telecom (DoT) is expected to recommend cancellation of the Aditya Birla Group promoted, Idea Cellular's licence in Karnataka along with that of Spice in Andhra Pradesh.

Idea Cellular picked up a 41.09 per cent stake in Spice in 2008 following which the two merged, which has created a situation in which the same company holds overlapping licenses in six circles. Idea claims it has not breached any condition of the license agreement.

The DoT has not yet approved the merger and will likely issue a show cause notice to the two companies for cancellation of license in Karnataka and Andhra Pradesh. The notice would also refer to the fact that Idea and Spice had failed to meet their roll out obligations.

DoT's decision on issuance of notice comes on recommendations of the Telecom Regulatory Authority of India or TRAI.

Meanwhile, Idea Cellular's stock was up nearly 4 per cent yesterday following media reports about a possible stake sale by one of its shareholders, Axiata, a Malaysian group with investments in communications companies across Asia.

Like other telcos, Idea Cellular, has been facing problems of lower profitability due to intense competition even as subscriber additions have been impressive. This has affected its stock returns in the past year, with the stock frequently trading below its 2007 IPO offer price of 75.