The Central Bureau of Investigation or CBI earlier this week searched the house of former telecom minister Dayanidhi Maran in Chennai. Serial entrepreneur C Sivasankaran or Siva had some time back alleged that Mr Maran had forced him to sell Aircel, his Indian cellular telephony company, to Maxis of Malaysia. What aroused suspicion was that Maxis subsequently invested large sums of money – $150 million or Rs 675 crore – in Sun Direct TV, the DTH business of the Marans. On his part, Mr Maran has steadfastly denied any wrongdoing. It will be a while before the CBI first information report becomes a charge sheet. And Mr Maran will surely defend every charge in the court.
What really happened when Mr Maran was in charge of the telecom ministry at Sanchar Bhawan between 2004 and 2007? The report of Justice Shivraj V Patil on the “examination of appropriateness of procedures followed by [the] department of telecommunications in issuance of licences and allocation of spectrum during the period 2001-2009”, which was submitted on January 31 this year, throws some light on it.
Mr Maran took over in May 2004. On March 5, Dishnet Wireless, a Siva company, had applied for licences in eight circles including Madhya Pradesh. Letters of intent were soon issued and licence agreements were signed for all the circles, except Madhya Pradesh. On April 21, the company applied to the Department of Telecommunications (DoT) for licences for the Uttar Pradesh (East) and Uttar Pradesh (West) circles. The rule book said that all such applications had to be processed within 30 days. A DoT note of May 5 said that Dishnet’s aspects of funding, especially the projected debt-equity ratio of 1:1, did not seem very explicit. Questions were also asked about the sudden rise in the company’s net worth. “This was not warranted in terms of notified procedures/guidelines,” Justice Patil noted in his report.
Siva had shot to fame in 1985 when his Sterling Computers launched personal computers for as little as Rs 33,000 — rival machines cost as much as Rs 80,000 at that time. He would operate out of the presidential suites of luxury hotels and was partial towards Rolex gold watches, Montblanc pens and food. Siva was especially busy in 1997 when he bailed out an Indian-owned bank in Thailand along with Hong Kong-based tycoon Hari Harilela, invested in the Chiva-Som Resort in Thailand (Asia’s first spa destination) and launched cellular services in Tamil Nadu under the Aircel brand. In 2003, he bought 79 per cent in RPG Cellular (Chennai circle) for Rs 210 crore.
The flurry of applications for new circles meant that Siva wanted to expand in mobile telephony, and that’s why Dishnet had paid around Rs 300 crore for the seven new circles. But progress on the other three circles – Madhya Pradesh, Uttar Pradesh (East) and Uttar Pradesh (West) – was slow. Once he gave all the clarifications on July 8, 2004, a proposal was moved within DoT to take up the application for the two circles and extend the time for signing the licence agreement for Madhya Pradesh. The proposal was put up for Mr Maran’s approval. On August 24, Mr Maran’s office sought clarifications on the financial ties between Dishnet and its sister companies that operated cellular services in the country, especially in Chennai and Tamil Nadu. His office also wanted to know if newspaper reports that Dishnet would be sold to one of its sister concerns were true and what would be its implications. “The clarifications sought, besides being vague, were also irrelevant for consideration of application for grant of the universal licence,” Justice Patil observed.
On December 13, legal opinion was sought on the matter, but the file was withdrawn four days later. On March 1, 2005, Siva applied for more licences in the Haryana, Kolkata, Kerala and Punjab circles. On March 30, DoT officers were asked to ascertain all the show-cause notices and advisories issued to Dishnet and its sister concerns. The matter dragged on for well over a year. Then, sometime in December 2005, Siva announced that he would sell Aircel to Maxis. In March 2006, Maxis informed its shareholders that the Aircel deal had been completed. On May 22, 2006, Dishnet filed a fresh set of information which was accepted. Once the Foreign Investment Promotion Board gave its nod, the letters of intent for the all the six circles were issued on November 1 and the letter of intent for Madhya Pradesh was slightly modified.
Was Siva exasperated by the delays? He re-entered the Indian telecom market with S Tel. It was one of the applicants who got a licence on January 10, 2008, the eventful day when businessmen, in a scene straight out of the fish market, pushed and shoved to move ahead in the queue. And it was S Tel that had queered the pitch in November 2007 when it wrote to Prime Minister Manmohan Singh that it would pay the government Rs 6,000 crore over 10 years for a pan-India GSM licence. It raised the offer to Rs 13,752 crore a month later. If this offer was used as the benchmark, the Comptroller and Auditor General said in its report of 2010-11, the loss from the sale of 2G spectrum in 2007 at prices determined in 2001 was Rs 67,364 crore. S Tel subsequently withdrew the offer.