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2G scam: Govt threatens to cancel telcos' licenses

Last updated on: November 29, 2010 18:55 IST

2G scam: Govt threatens to cancel telcos' licenses

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The government will send notices to 85 companies asking why their licences should not be cancelled for suppressing facts, said Telecom Minister Kapil Sibal on Monday.

These telecom firms will be given 60 days within which to respond.

The Department of Telecom will issue notices to telecom companies which were ineligible to get spectrum.

Many companies applied for 2G licences may not have disclosed all facts, Sibal said.

Commenting on the Comptroller and Accountant General of India (CAG) report in to the Rs 176,000-crore (Rs 1,760 billion) telecom scam, the minister said: "It is an opinion."

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Image: New Telecom Minister Kapil Sibal.
Photographs: Reuters
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The DoT will issue notices in 119 instances, dating back to 2006, of not complying with rollout obligations, Sibal said.

The government will ensure that the rule of law is honoured and the guilty will be dealt with in accordance there of, Sibal added.

Sibal also said that the DoT will refer the Swan Telecom issue to the Union ministry of corporate affairs to investigate if there are front-companies involved.

"We are not averse to Supreme Court monitoring investigations into irregularities in 2G spectrum allocation," Sibal added.

Less than 10 days ago, the Telecom Regulatory Authority of India had asked the government to cancel 62 licences given to five companies, including Etisalat (Swan), Uninor and Videocon.

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

The action came 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 was 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, cancellation of 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 was also sought.

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Photographs: Reuters
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The action coincided 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 rollout 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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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 a fortnight ago 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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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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