‘Criminal conspiracy’ alleged on award of telecom licences in 2008
Communications Minister A Raja found himself at the centre of yet another storm with the Central Bureau of Investigation (CBI) searching the offices of the Department of Telecommunications (DoT), which he heads, in response to complaints of irregularities in the way 2G (second-generation) licences were awarded to nine new operators in 2008.
In a press release, CBI said it had registered a case on October 21 against “unknown” DoT officials and “unknown private persons and companies and others” under the Prevention of Corruption Act. The press release did not specify who made the complaints.
The CBI statement says it received information of a criminal conspiracy between certain DoT officials and “private persons and companies and others” to award licences to these companies by putting a cap on the number of applicants. This method contradicted recommendations by the Telecom Regulatory Authority of India (Trai).
Also, the licences were awarded to private companies on a first-come-first-serve basis at 2001 fee rates without any competitive bidding.
The press release added that searches were conducted to collect documents in the Wireless Planning Cell (WPC) and in the office of Deputy Director General (Access Services) at Sanchar Bhawan, DoT’s headquarters.
The move revives allegations against Raja who was criticised by telecom companies, members of parliament and political parties for awarding licences to new operators at a very low price (Rs 1,650 crore for a pan-India licence, which was the 2001 rate). These operators, in turn, sold part of their stakes to foreign companies soon after and made a killing. Raja's critics said this method of awarding licences caused the government to forfeit revenue worth over Rs 40,000 crore as a result.
Suspicions arose last year when two new players — Unitech Wireless Services and Swan Telecom — sold part of their stake in their companies at huge premiums within weeks of acquiring the licences.
While Swan sold 45 per cent stake to Etisalat for $900 million (Rs 4300 crore), Sanjay Chandra-promoted Unitech group sold 74 per cent to Telenor for over Rs 6,100 crore.
DoT justified the sale on grounds that they were equity expansions, not stake sales, which carry a three-year lock-in. Raja defended his position, saying, “All new licences were issued after following all principles. Even my predecessors followed the same principles. There was no external force or any violation of law in issuing new licences.”
DoT was also criticised for the first-come-first-serve basis for allocating spectrum, radio frequencies that enable mobile communications, even though the number of bidders outnumbered the number of licences that were issued, a policy that caused an unseemly scuffle among telecom company representatives inside Sanchar Bhavan the day the licences were awarded. There were 575 bidders only 120 licences were issued.
DoT also imposed a cut-off deadline of 25 September, 2007 for applications that would be considered. The deadline was imposed suddenly and without explanation, deterring many bidders.
Today’s investigations by Raja come a week after Finance Minister Pranab Mukherjee admonished Raja in a strongly-worded letter over delays in auctions of 3G licences from December this year to June next year. DoT said it had delayed 3G auctions on grounds that the defence ministry had deferred releasing spectrum on schedule as it had promised.
Also read:
October 22: No delay in 3G auction possible, Pranab tells Raja
