Vodafone Idea Faces ₹26.83 Crore Notice Over Spectrum Obligations

Vodafone Idea Limited has received a notification from the Indian Department of Telecommunications (DoT) regarding a demand for ₹26.83 crore in liquidated damages. This demand pertains to an alleged failure to meet minimum rollout obligations connected to spectrum allocated during the 2022 auctions. In a filing to the Bombay Stock Exchange, the telecom operator confirmed receipt of the notice and stated it is currently under review to determine its next course of action. The notice was officially issued on Friday, 31 July.

The issue highlighted in the notice relates specifically to compliance with network rollout obligations outlined in the Notice Inviting Applications (NIA), which governs the spectrum auction process. According to the terms, telecom operators are mandated to adhere to certain deployment standards once spectrum has been assigned.

Despite the notice, Vodafone Idea reassured stakeholders that its regular operations would not be materially impacted. The company's financial position remains stable, as underscored in its exchange filing. ‘The company is reviewing the notice and evaluating the next steps in this matter,’ it stated.

On 28 July, shares of Vodafone Idea closed at ₹13, reflecting a gain of 1.09% prior to the disclosure regarding the notice. However, its stock has seen a decline of over 10% in the past month, although it remains approximately 20% up over the last six months, as per data from the National Stock Exchange.

The 2022 spectrum auction, notable for being India’s inaugural sale of 5G airwaves, was also the largest spectrum sale conducted in the country. A total of 51.2 gigahertz (GHz) of spectrum was auctioned, covering a variety of frequency bands including 600 MHz, 700 MHz, 800 MHz, and 26 GHz, among others. Vodafone Idea acquired limited spectrum in select regions compared to its competitors, Reliance Jio and Bharti Airtel.

In the June 2024 auction, Vodafone Idea secured 30 MHz of spectrum at a cost of ₹3,510.40 crore, while Bharti Airtel and Reliance Jio purchased larger volumes for higher sums. The 2024 auction raised a total of ₹11,340 crore from the sale of 141.4 MHz of spectrum, with both Airtel and Vodafone Idea renewing their expiring spectrum holdings in crucial frequency ranges.

Eshita Gain, a digital journalist at Mint, contributed to this report.