There has been no under-valuation of the 2G spectrum and all decisions regarding issuance of new licenses were in accordance with TRAI recommendations, Telecom Minister A Raja said on Friday.

He also offered to resign in case his ministry had violated the law in allocating spectrum.

Unitech, a realty major, sold 60 per cent in its telecom arm to Norway's Telenor for Rs 6,120 crore (Rs 61.20 billion) and Swan had sold 45 per cent stake to Etisalat for $900 million, raising the issue of loss of revenue to the government.

It was said since the companies paid a mere Rs 1,651 crore (Rs 16.51 billion) as licence fees before selling stakes at high prices, the government had lost the difference.

Arguing that the two companies Swan and Unitech, which have sparked a controversy over the alleged loss for the government in the allocation 2G spectrum, have sold only stakes and not spectrum or license as alleged, Raja said it was normal practice to sell stakes to further the investment in such ventures.

"The foreign companies have entered into an agreement to subscribe new equity shares of the company. No shares of the founding promoters of the companies have been sold. Hence the question of windfall gain or for that matter any gain for the promoters does not arise. "In the case of Swan, Rs 3,500 crore (Rs 35 billion) is proposed to be inducted into the company. In the case of Unitech, Rs 6,000 crore (Rs 60 billion) shall be inducted by the foreign partners in the company," he said.

Venturing to explain how things stood, Raja said the companies have merely sold stakes to get in more money as investment. "Let me try and explain it to a lay person. You buy 500 acres of land somewhere for a power project and you have got an approval from the electricity department. Now that land you bought for, say Rs 50 crore (Rs 500 million) might be valued at Rs 500 crore. To fund your project, is it wrong in selling part of the stakes in that Rs 500 crore? That is what has happened here. There is nothing wrong and it is accepted practice," he said.

"Likewise, it is necessary for such licensees to seek technical, managerial and financial support from suitable collaborators in order to successfully comply with the license conditions," he said.

On the need for changes in law, Raja said, "Aren't things just fine as they are? Since the introduction of revenue share regime in 1999, the government has got more than Rs 50,000 crore (Rs 500 billion) on account of just license fees. In addition, the government received Rs 9,000 crore (Rs 90 billion) on account of spectrum charges and Rs 19,500 crore (Rs 195 billion) on account of entry fee. In 2007-08 alone, the entry fee we got was Rs 12,500 crore (Rs 125 billion).

"This annual fee has been increasing year after year as the subscriber base has been increasing. Hence, loss of revenue for not resorting to auction is only a myth and is compensated by revenue every year. He also said that the matter of sale of equity by promoters has been discussed with the finance minister.

"It has been discussed with the minister. Further, MoC&IT has on November 5 directed that the Telecom Commission may deliberate on the issue of prohibiting sale of equity by promoters," he said.