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Cancel licences of 5 new telecom firms, says Trai!

Last updated on: November 18, 2010 17:22 IST

Cancel licences of 5 new telecom firms, says Trai!

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In a swift action against new telecom players who were given licences in 2008, the Telecom Regulatory Authority of India on Thursday asked the government to cancel 62 licences given to five companies, including Etisalat (Swan), Uninor and Videocon.

The recommendation for this strong action was made to the telecom ministry on Thursday owing to the companies' non-compliance or irregular roll-out of network, as laid down in the contract.

The action comes amid the Comptroller and Auditor General slamming the telecom ministry for irregularity and impropriety in giving licences to new players in 2008, causing a loss of a whopping Rs 1.76 lakh crore (Rs 1,760 billion) to the exchequer.

As per the Trai report, cancellation has been sought for licence in 15 circles given to Etisalat, a company earlier known as Swan that CAG had dubbed as a front company of Anil D Ambani Group.

Besides, licences to Unitech group's Uninor in eight circles, 10 to Sistema-Shyam, a joint venture between Russia's Sistema and India's Shyam group, 10 to Videocon, which Venugopal Dhoot-led group acquired from Mahendra Nahta's Datacom, and 19 of Loop.

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Photographs: Reuters
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The action also coincides with the Supreme Court hearing into the allocation of 2G spectrum in 2008 at 2001 prices.

Of the 62 telecom licences recommended to be cancelled, 34 are for missing out on roll-out obligations, while the other 28 are for improper roll-out.

As per the Trai report, licences of Etisalat in two circles, eight telecom circles of Uninor, licences in ten circles of Sistema and 14 telecom licences of Loop were recommended to be cancelled for missing roll-out deadline.

As per the conditions of licence, the licencees are required to roll-out the services in 90 per cent service area in metros and 10 per cent district headquarters in other service areas within 12 months of the date of award of licences.

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Image: Former telecom minister A Raja.
Photographs: Reuters
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For improper roll-out, licences of Etisalat in 13 circles, Videocon in 10 circles and licences of Loop in five were recommended for cancellation.

This may spell more trouble for the beleaguered former telecom minister, A Raja, who is facing allegations of causing huge revenue loss due to non-auction of 2G spectrum (radio waves), given to nine operators in 2008.

Raja resigned earlier this week owing to pressure following his indictment by government auditor CAG on allocation of 2G licences and spectrum (air waves).

The CAG report said that DoT also did not do the requisite due diligence in the examination of the applications submitted for the licences, leading to the grant of 85 out of 122 licences to the "ineligible applicants" (who did not have stipulated paid-up capital at the time of application).

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Photographs: Reuters
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Further, 45 out of 85 licencees were issued to companies which failed to satisfy conditions of main object clause in the memorandum of Association (MoA), CAG had said in the report, tabled in Parliament on November 16.

The auditor also said one of the licencees Swan appeared to act as a "front company" on behalf of Anil Ambani-led Reliance Telecom.

The Anil Ambani group has, however, said it had no shareholding in Swan at the time of grant of licence or any time thereafter.

Meanwhile, mobile operator Uninor said that it expects to get spectrum for the Delhi region in the first half of next year.

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Photographs: Reuters
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Uninor, which is a joint venture between Norway's Telenor and Indian realty firm Unitech, currently has operations across 13 of the 22 circles in India.

"We expect to get spectrum for the Delhi region in the first half of next year. We are ready for roll-out as soon as we get the spectrum from the government," Uninor managing director Sigve Brekke said on the sidelines of the GSMA Mobile Asia Congress in Hong Kong.

Telenor holds 67.25 per cent stake in Uninor, the rest is with real estate firm Unitech. The company had received licence to roll out services in 21 of the 22 circles.

At present, Uninor operates in UP West (including Uttaranchal), UP East, Bihar (including Jharkhand), Orissa, Tamil Nadu, Karnataka, Kerala, Andhra Pradesh, Maharashtra, Mumbai, West Bengal, Kolkata and Gujarat.


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