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The Bombay High Court has handed a major win to Bharti Airtel and Vodafone Idea. It ruled that the Centre cannot go back and ask telecom companies to pay new spectrum charges years after they had already signed their licence agreements.
Spectrum charges are the fees telecom companies pay the government to use the invisible airwaves that carry mobile calls, texts and internet data.
The decision cheered investors, with shares of both companies rising.
The case: in 1999, the government changed how telecom companies paid for their licences under the National Telecom Policy (NTP), 1999.
Instead of paying a fixed fee, companies began paying the government a share of their revenue. They also paid more whenever they received extra spectrum (the airwaves used to provide mobile and internet services).
But in 2012, the Centre introduced a new One-Time Spectrum Charge (OTSC) on companies using more than 6.2 MHz of spectrum and made it apply from 2008, meaning companies were asked to pay extra for spectrum they had already been using for years.
What the verdict means: Bharti Airtel and Vodafone Idea argued that this was unfair because the original licence agreements and the Indian Telegraph Act, 1885 did not allow the government to change the payment rules later.
The Bombay High Court agreed, saying the government cannot rewrite old contracts just to collect more money. It also noted that earlier recommendations by TRAI suggested such a charge should apply only to companies holding more than 10 MHz of spectrum.
The impact: the court cancelled the One-Time Spectrum Charge, scrapped the payment notices sent to both companies, ordered the government to return their bank guarantees, and granted relief estimated at nearly ₹20,000 crore.
