Top businessmen questioned over Indian telecoms scandal
The Central Bureau of Investigation has confirmed that Anil Dhirubhai Ambani Group CEO Anil Ambani, the fourth richest Indian, and Essar group CEO, Prashant Ruia were both questioned.
The questioning was part of the ongoing investigation that has already pulled in several politicians and paralyzed the national Parliament.
According to sources, Ruia was questioned about the alleged association of Essar with Loop Telecom – which has been the cause of much speculation over the past couple of years as to whether the company might use it to set up their own phone network in competition to its partnership with Vodafone.
It’s been estimated that the government could have lost up to US$38 billion from the way the licenses were just handed out on a first-come, first-served basis rather than being auctioned off to bidders as would have been the norm in most countries.
Last Friday though, the investigation expanded outside the telecoms industry as CBI officials raided the offices of Kalaignar TV, which is owned by politicians allied with the government coalition. Investigators are looking into whether kickbacks in the scandal were routed through the television company.
Reliance Communications hits out at ‘fraudulent’ rivals
Anil Ambani’s Reliance Communications has lashed out at “unscrupulous” and “fraudulent” rivals, escalating hostilities in what many say is aimed at turning the attention of investigators probing the telecom scandal away from itself and on to competitors such as Bharti Airtel, Vodafone Essar and Idea Cellular. RCOM’s head of wireless business, Syed Safawi, on Sunday accused rivals of ‘fraudulently misleading the government’ in connivance with ‘certain Department of Telecom (DoT) officials’ and causing ‘staggering losses’ to the state.
He said promoters of these rival firms had amassed personal fortunes running into more than Rs 1,00,000 crore during the past decade by their actions. While Safawi, who read out from a statement that was later mailed to the media, did not name any rivals and only referred to them as “old 2G operators,” a senior Anil Ambani group official said the reference was to firms such as Bharti, Vodafone and Idea. Bharti Airtel and Vodafone Essar declined to comment.
This surprise fusillade of allegations came as shares in all Anil Ambani group firms were battered last week, with RCOM falling to a record low amid speculation that CBI officials investigating the multi-billion dollar telecom scandal were soon likely to question its officials. Shares in RCOM, closed last week at Rs 97.15, off record lows but down from the . 160-level they traded three months ago. RCOM said while the CBI was examining “certain employees of the Reliance ADA group,” the investigations were by no meant restricted to its executives and had covered more than 50 people from across a large number of telecom operators.
The CBI has already arrested former telecom minister A Raja and Shahid Balwa, the founder of the erstwhile Swan Telecom. The Comptroller & Auditor General has pegged losses to the government because of this scandal at . 176,000 crore. RCOM has had past links with Swan, now renamed Etisalat DB Telecom , after UAE’s Etisalat bought a stake in the company. Balwa is one of the founders of DB Realty, a Mumbaibased property developer. The Anil Ambani group held a 9.9 percent stake in Swan Telecom when the latter applied for licences in March 2007, but says it sold its shares before Swan was awarded telecom licences in January 2008.
An RCOM official, Hari Nair, held the position of Swan’s company secretary, but the company says he “ceased to hold the post well before a licence was granted to Swan Telecom.” RCOM declined to disclose Nair’s present role. RCOM said it was a victim of a “malicious campaign of disinformation, falsehoods and calumny” being spread by rivals and accused the socalled “old 2G operators” of obtaining licences without any auction process and without paying any licence fees in 1994-95 . But some experts differed with its argument.
“Reliance had ample and equal opportunity to obtain these very 2G metro licences that its competitors Bharti Airtel and Vodafone Essar acquired. These metro licences may have been cheap but they were given through an open process,” said Mahesh Uppal, director at Com First India. “On the contrary, few would consider that the process to award dual technology licences was fair or transparent. It would be difficult to argue that Reliance’s competitors had advantages over it in either licensing or allocation of 2G spectrum.” But RCOM said the award of dual technology licence to it was legal and had been upheld by the Delhi High Court and by the TDSAT.
RCom, Airtel plan exit from rural telephony scheme (India)
RCom and Bharti Airtel have approached the government seeking an early exit from the rural telephony scheme under the USO subsidy without fulfilling the commitment they had made by winning bids in 2007 to provide telecom services in villages.
The government has an over US$3.07 billion amount under the Universal Service Obligation (USO) Fund. All service providers contribute to this fund and it is used to provide subsidy to operators and infrastructure providers to set up operations and offer telecom services in rural areas.
The Telecom Ministry is contemplating to ban the non-performing service providers from participating in the next round of bidding, to be launched soon.
The administrator handling the fund is also planning to change the criteria in a way that operators and infrastructure providers were not allowed to exit without fulfilling their commitments and are offered subsidy accordingly.
The government had invited bids in 2007 to create telecom infrastructure and provide services in villages and had offered subsidy as well, but the operators opted to go there without seeking subsidy or even offered negative subsidy (instead they offered to pay to the government) either to block other service providers from going there or because they over-estimated the potential in rural villages.
Officials in the Universal Service Obligation (USO) Fund administration under the Telecom Ministry confirmed that Reliance Communications has less than 500 base stations active out of about 8,000 committed by them. Similarly, Bharti has also approached the USOF to exit from the scheme.
Officials added that however, the requests of Reliance Communications and Reliance Telecom (both belong to Anil Ambani-led group) and Bharti have been turned down. There is no provision for service providers to unilaterally exit from the agreement. An exit policy is being framed, but no final decision has been taken in this regard.
Rural tele-density continues to be as low as about 26%, as against 69% penetration in urban India.
Increasing rural telephony has been the government’s priority and launch of any scheme may take all these factors into consideration while inviting bids for subsidy to be availed by the service providers to offer services in the rural areas.
SC asks RCom to deposit 50% of raised spectrum fee (India)
The Supreme Court of India has directed Reliance Communications (RCom) and Reliance Telecom (RTel) to deposit 50% of the increased spectrum usage charge demanded by the Department of Telecommunications (DoT) and to give a bank guarantee for the rest within two weeks.
Telecom service operators have to pay a percentage of their adjusted gross revenue to the government as a bandwidth usage charge, depending on the amount of spectrum held.
As per the previous reports, the telecom department had asked the two Reliance Group firms to deposit a combined $20.6 million for using bandwidth as per the new rules.
Reliance Communications’ statement follows an order by the Supreme Court of India that Reliance Communications and Reliance Telecom Ltd.–owned by Indian businessman Anil Ambani–deposit with the court 50% of the increased spectrum usage charge demanded by the Department of Telecommunications.
According to the company, the order was exactly the same as those passed in similar cases brought by its rivals Bharti Airtel Ltd. and Vodafone Essar Ltd. Many operators have challenged the telecom department’s move to raise bandwidth usage charges from 2%-6% to 3%-8% of adjusted gross revenue effective April 1, 2010, depending on the quantum of spectrum held by an operator. There is no additional liability, on Reliance Communications compared to operators in the case. It added that the company was already making payments under the increased charges under protest.
According to reports, Bharti Airtel and Bharti Hexacom Ltd. were asked to pay US$48.28 million in total, while Vodafone Essar, a unit of UK’s Vodafone Group PLC and the country’s No. 3 operator was told to pay US$29.63 million in charges.
DoT refuses RCOM plea for additional spectrum (India)
DoT has rejected Anil Ambani-promoted Reliance Communication’s plea for additional 2G airwaves for its GSM based mobile services, and has also put on hold similar pending applications from other new entrants.
According to telecom ministry’s internal note it is not appropriate to process additional spectrum requests from any operator, including RCOM, since sector regulator TRAI was looking into the feasibility of pricing additional airwaves.
RCOM, which had been awarded 4.4 MHz of start-up GSM radio frequencies in most circles, had demanded for additional 1.8 units of spectrum on the grounds that this was the minimum amount committed to the company when it obtained approvals to launch services on this technology platform in 2008. Additional airwaves are given to companies after their subscriber base grows to touch certain pre-defined targets – these figures differ from state to state.
RCOM in its application for additional airwaves had also pointed out that TRAI’s latest recommendations say additional airwaves must first be made available to new entrants who have already been awarded start-up spectrum to help them perform their operations efficiently.
This implies that companies which hold 4.4 MHz of start-up spectrum will be given first priority to enhance this to 6.2 MHz for no additional cost. Next in line will be incumbents that currently hold less than 8 MHz of airwaves. Their holding will be enhanced to the 8 MHz cap provided they meet rollout obligations and pay the one time fee.
TRAI had added last in queue will be new entrants like Tata DoCoMo and Uninor, which are yet to receive start-up airwaves in many circles.
It is also learnt that the telecom ministry had decided to put on hold additional airwave allocations to all existing companies in a bid to avoid any legal complications.
This is because, Tata Teleservices told the telecom department that any move to award 2G spectrum according to a formula prescribed by the regulator would amount to serious discrimination against the company, while adding that the company had first rights to these scarce resources.
The telco, in which Japan’s DoCoMo has a 26% stake, also stated that any move to award additional airwaves first to operators that already had start-up spectrum of 4.4 MHz would favour a single company and would be discriminatory to others.
Tata Tele has been agitating with the government after the telecom department’s legal wing recently endorsed a proposal by TRAI which stated that additional airwaves should first be made available to new entrants who have already been awarded start-up spectrum to help them perform their operations efficiently.
While the implementation of this proposal will benefit RCOM in all circles, it will result in operators such as Tata DoCoMo and Uninor which are yet to receive start-up airwaves in many circles being placed last in the priority queue for airwaves, and these companies will not stand any chance to get startup 2G spectrum in circles like Delhi.
ADAG to get $3 billion loan from China banks (India, China)
If reports are to be believed, the Reliance-Anil Dhirubhai Ambani Group (R-ADAG) will get around $3 billion in loan as a part of deal that will be signed during the visit of Chinese Premier Wen Jiabao.
According to reports, part of the money would be used to fund equipment purchases from Chinese companies by the Indian group’s telecom and power units.
The report added that Reliance Communications, India’s second-biggest mobile phone operator and controlled by billionaire Anil Ambani, will sign an accord with China Development Bank for a $1.93 billion, 10-year loan.
According to Reliance Communications spokesman, a deal would be signed with China Development Bank for a loan, but declined to give details.
MTN- Reliance deal fuelled after Ambanis’ ceasefire
www.WirelessFederation.com/news: The resolving of the dispute between the Ambani brothers has been expected to be the reason behind the sudden 6% increase in the share price of MTN, South Africa’s leading telecoms company and the biggest mobile operator on the continent.
According to a deal between Mukesh Ambani and Anil Ambani, both of them will do away with non-compete†agreements they had signed when they divided their late father’s empire between them in 2005. India’s second-largest mobile operator, Reliance Communication owned by Anil Ambani has also been included in the agreement. Older brother Mukesh had enacted a right of first refusal when Anil had tried to sell a large stake in Reliance to MTN two years earlier calling it an incompetent deal.
In the current scenario, it is unlikely that Mukesh will come up with any objections and if the deal materializes, it would create one of the world’s largest emerging-markets mobile groups with about 230m subscribers. However, many believe MTN would be more than reluctant to consider returning to the negotiation table with an Indian company.
Three attempts had been made in the past by Phuthuma Nhleko, MTN’s chief executive to tie up with an Indian company; once with Reliance and two times with Bharti Airtel, the biggest company in the subcontinent. The failure of the talk with Bharti Airtel had been the topic of discussion after the Indian telco clinched a deal with Zain Africa. There is speculation that the MTN board will review its India strategy at the meeting due to objections from the Algerian government.
A deal with Reliance if it followed the previous structure put forward by Anil Ambani would give MTN a 51 per cent stake in Reliance Communications in return for a 25 per cent stake in the South African group. However, as of now, the prospect of a return to India might appear to be far-fetched.
Reliance plans IPO for Infrastructure arm. Hopes to raise $1Bn for 10% via IPO.
India’s second largest Mobile Operator, Reliance Communication plans to seek regulatory approval for selling 10% of Reliance Infratel (its infrastructure arm) for close to $1Bn.
Reliance Infratel sold a 5 percent stake to global investors for about $290 million in 2007. It had revenue of more than $1 Bn and a profit of $300 Mn in the year ended March 31, according to Billionaire Chairman Anil Ambani.
The share sale will help fund an expansion of the nationwide network of 48,000 towers at Reliance Infratel as demand for leasing networks is likely to double in the next couple of years according to Ambani.
Reliance Comm to bid for mobile licences abroad
The Reliance-Dhirubhai Anil Ambani Group, has plans to bid for mobile licences abroad for providing high-end business process outsourcing services, reports Business Standard.
It has lined up a raft of initiatives to give its telecommunications business a global footprint.
Moreover, the company also plans to take Internet protocol television (IPTV) and other media services to consumers in foreign markets after it launches them in
India
.
In order to carry these services, the group will set up three broadband cable networks- one from India to China through Nepal, two, an undersea cable between Asia and the US, and three, an extension of its Falcon cable from the Maldives to East Africa. Industry analysts put a USD 1 billion price tag to these three cable systems.
The group is also eyeing mobile licences in
Kenya
,
Bhutan
and
Morocco
.
Source- http://www.myiris.com
