Shares of Idea Cellular fell by over 7 per cent in early trade on the Bombay Stock Exchange today after the telecom firm was slapped with a Rs 300 crore fine over alleged violation of M&A norms.
The Additional Solicitor General (ASG) of India has held Idea Cellular in violation of merger and acquisition norms and suggested stringent penalties, including a Rs 300 crore fine and cancellation of 3G spectrum licences in four circles and 2G licences in six circles.
Reacting sharply to the news, shares of the telecom services provider plunged by 7.14 per cent to an early low of Rs 58.50 apiece on the BSE.
Idea shares took a similar beating on the National Stock Exchange, where it tanked by 7.47 per cent to a low of Rs 58.20 in the morning session.
On the volume front, over 49 lakh shares of the company were traded on the two bourses. The proposed penalty is related to the alleged violation of merger and acquisition norms when the Aditya Birla Group company bought an equity stake in Spice Telecommunication in 2008.
As per Additional Solicitor General A S Chandhiok, Idea Cellular and Spice have violated the lock-in period clause that stipulates that a company cannot enter into an agreement for merger before three years from the effective date of licence.
In this case, four new licences were issued to Spice and two to Idea Cellular on January 25, 2008. Hence, the two could not have merged operations until January 2011.
Meanwhile, the BSE barometer index Sensex was trading flat at 18,403.62 at 1155 hours today.