Kapil Sibal rejects huge loss report (India)
Indian government Communications Minister, Kapil Sibal has stated that the methodology used to come up with the US$40 billion loss to the government from the allocation of mobile network licenses in 2008 was flawed and that there was actually no loss to the government at all.
He was referring to the report from India’s Comptroller and Auditor General (CAG) which sparked a political scandal when it reported that the allocation of licenses by former Minister, A Raja had been undervalued by between US$12.8 billion and US$40 billion
According to Sibal, the figure of Rs US$40 billion is so utterly erroneous that he would have thought that a complicated and complex issue like this should not have led to the conclusion of this magnitude, which has embarrassed the government and the nation.
The loss is Zero, nil, he stated, refuting the audit estimate point-by-point. He also blamed the opposition for hyping up the issue.
For its part, the CAG claimed that it stands by its report, and the loss it calculated had occurred.
TRAI asks government to terminate 62 licenses for launch postponement (India)
The Indian telecom regulator TRAI has asked the government to terminate 62 of the 122 licenses issued by ex- telecom minister A Raja as they have crossed the deadline of the services.
The recommendations of TRAI which claims that its views were ignored by Mr Raja, toughens the possibility that several of the licenses issued in 2008 could be canceled.
According to sources, the telecom department, under new minister Kapil Sibal, decided to seek legal opinion on the validity of the telecom licenses allotted by Mr Raja after the country’s national auditor stated that 70% of these mobile permits were obtained through fraudulent means.
The Comptroller and Auditor General of India (CAG) had stated in its report on Tuesday claining that 85 of the 122 licenses given to six companies, notably Uninor, Videocon, Loop Telecom, S Tel, Etisalat and Allianz Infratech, were illegal as these firms were not eligible to obtain them. The auditor also added that these six companies had disclosed incomplete information and submitted fictitious documents and used fraudulent means for obtaining them.
According to the chairman of the Telecom Regulatory Authority of India, JS Sarma, mobile permits held by Loop in 14 service areas; Etisalat DB Telecom in two service areas; Sistema Shyam Teleservices in 10 service areas and Unitech Wireless in eight areas, be withdrawn because of these lapses. India is divided into 22 telecom circles.
TRAI further recommended that 13 licenses of Etisalat DB Telecom; five of Loop Telecom, and 10 of Videocon Telecommunications, also be cancelled, as the network rollouts undertaken by these companies fell short of the requisite conditions specified in the agreements that they had entered into with the government.
Service started only after Government nod and FIPB approval: Telenor
Uninor, a joint venture of Norway’s Telenor and Indian realty firm Unitech, which is in the eye of a storm over CAG revelations on 2G spectrum allocation, stated that it started operations in India only after getting all government clearances.
According to Uninor Managing Director Sigve Brekke, the company entered Indian market by clearing the license obligation. They also asked the government for FIPB approval allowing them to own above 50%.
Getting government approval and also FIPB nod means the application has been scrutinized twice, first by the Department of Telecom (DoT) and then by the Ministry of Finance for acquiring more than 50% stake in Unitech Telecom Services.
He, however, added that the company is taking a cautious approach towards investments, particularly in a daily changing environment of the Indian telecom industry.
As per Brekke statement, the company entered India with the clear understanding that everything is OK and they have invested in US$ 1.2 billion, have 40 million subscribers of Uninor already. So they will see what the Government is doing as its responsibility.
Extensive 2G Spectrum allotment to old players (India)
CAG has submitted its 2G spectrum report to the Government. As per its report, nine existing operators were allotted spectrum beyond the upper limit as specified in the Unified Access Servicing License. The CAG report on 2G spectrum has estimated that the exchequer lost nearly US$ 8140.87 million.
These operators are Aircel, Bharti Airtel, BPL (Mumbai), Bharat Sanchar Nigam Ltd (BSNL), Idea Cellular, MTNL (Delhi & Mumbai), Reliance Communications, Spice and Vodafone.
According to CAG report, the DoT, on one hand was not processing pending applications for license due to non-availability of spectrum and on the other hand it was giving spectrum to existing operators beyond the contracted limit without any upfront charges being imposed or without determination of market price of spectrum.
Based on the estimates of the Comptroller and Auditor General of India, about a fifth of the presumed loss to the exchequer as a result of the 2G scam was on account of this sold factor.
RCom Denies stake in Swan Telecom (India)
India’s Reliance Communications has been accused of having an improper shareholding in Swan Telecom by the country’s Comptroller and Auditor General (CAG).
According to CAG’s report, Swan Telecom’s application for a telecoms license in 2007 breaches the Unified Access Service Licensing (UASL) regulations.
As per CAG ‘s report, it was evident that at the time of applying for UAS license, Reliance Telecom held a 10.71% stake in Swan Telecom – in breach of laws limiting cross shareholding to 10%. They also reported that the initial application paperwork was sent from an email address that can be traced to the Reliance Group.
According to CAG, since Reliance Telecom Ltd was operating in all the service areas for which Swan Telecom Ltd had applied for UASL, the application of Swan Telecom Pvt Ltd was not in conformity with the UASL guidelines and hence was not eligible to be considered.
However, RCom has denied that it was a shareholder in the company.
As per the reliance spokesperson, the company had no shareholding in Swan Telecom (now Etisalat DB) at the time of grant of license to them or any time thereafter, and that issue is accordingly not relevant to their company.
Spectrum Sale Cost India $31 Billion: CAG
The government’s auditor believes that India’s federal treasury may have lost as much as US$31 billion in revenue after telecommunication airwaves were sold below market rates two years back.
According to CAG, the Indian government collected only US$2.74 billion from the sale of the 2G wireless spectrum to companies. The airwaves were sold in 2008.
Andimuthu Raja resigned on Nov. 14 as the nation’s telecommunications minister after a year-long investigation into the sale of the wireless spectrum. The Central Bureau of Investigation has been examining the role Raja and the Ministry of Communications had in the pricing of the permits since October last year while the Supreme Court has been hearing public interest petitions on the subject.
According to the report, the auditor calculated the maximum estimated loss based on the prices at which the third-generation airwaves were sold in May. Based on another model, the under-pricing of 2G spectrum led to a loss of $11.84 million.
According to CAG, DoT failed to consider applications on a first come, first serve basis, allowing some applicants to jump the queue. The process by which the department issued the permits, called Universal Access Service, or UAS, licenses, lacked transparency and was undertaken in an arbitrary, unfair and inequitable manner.
As per the report, the department issued 122 new licenses to use 2G spectrum in 2008. 85 of the licenses were given to ineligible recipients. Companies including Unitech Ltd., Tata Teleservices Ltd., Shyam Telelink Ltd., (Sistema Shyam Teleservices Ltd.) and Swan Telecom Ltd.,( Etisalat DB Telecom Pvt.), sold stakes in their wireless ventures at significant premiums to the price they paid for spectrum.
The report further showed that these companies, created barely months ago, deliberately suppressed facts, disclosed incomplete information, submitted fictitious documents and used fraudulent means for getting UAS licenses and thereby access to spectrum. Owners of these licenses, obtained at unbelievably low price, have in turn sold significant stakes in their companies to Indian or foreign companies at high premium.
DoT has no plans to withdraw 2G spectrum
As per the Department of telecom (DoT) secretary and telecom commission chairman R Chandrasekhar, there was no plan to withdraw 2G spectrum allotted in 2008 from any of the players.
According to India’s chief auditor, CAG, many of the licenses given to five of the nine telecom companies were illegal. Swan (now Etisalat), Datacom (Videocon), Unitech (which ceded majority control to Norways Telenor), Sistema-Shyam and Essar Group-owned Loop Telecom were given pan-India licenses and airwaves for a mere 1,651 crore each.
Apart from these five companies, Reliance Communications and Tata Teleservices were also given GSM and CDMA licenses, at prices fixed in 2001. Similarly, auction of 3G airwaves early this year fetched the government US$15077.50 million
According to Mr Chandrasekhar, at this moment, there is no proposal before the department to take back any of the spectrum from any of the players.
CAG submits 2G spectrum report to Finance Minister (India)
As per the government auditor CAG, they have submitted the final report on the 2G spectrum allotment that may have caused a huge loss to the exchequer.
According to sources, the Comptroller and Auditor General (CAG) have submitted the report to the finance ministry and the President. The report may be laid in Parliament in the winter session beginning tomorrow.
The details were not immediately available, but as per sources, it has estimated a revenue loss of US$3992.32 Million to the government due to arbitrary policies like non-auction of 2G spectrum followed by Telecom Minister A Raja.
The telecom ministry had, however, hit at the CAG claiming that the policy decisions cannot be assailed as arbitrary and debunked CAG’s assertion that 2G spectrum was allocated in an arbitrary manner.
As per DoT in its reply to the Comptroller and Auditor General, decisions (on spectrum) taken on the basis of New Telecom Policy of 1999 and the Cabinet decision of 2003, coupled with periodic and respective TRAI’s recommendations. This cannot be assailed by the audit as arbitrary or cause of exchequer loss until and unless the entire policy devised with legislative backing is changed or modified by the same authorities concerned.
SC inquest on 2G spectrum scam (India)
The Supreme Court has asked the central government how long it would take to complete investigations into the 2G spectrum scam.
The court also sought the central government’s response to a Comptroller and Auditor General’s (CAG) report pointing out irregularities in allocation of spectrum 2G licenses to telecom operators.
According to the apex court bench headed by G.S. Singhvi, it would like to hear Solicitor General Gopal Subramanium on this and several other counts. The court directed the listing of the case on Nov 15.
