New Delhi: The department of telecommunications (DoT) may be preparing to issue a notice threatening to cancel the 13 telecom licences of Etisalat DB Telecom (formerly Swan Telecom) because it sees Swan as an associate of Reliance Telecom Ltd at the time it had applied for spectrum.
Swan is one of the entities that has been charged by the Central Bureau of Investigation in an ongoing case over alleged wrongdoing in the allocation of second-generation (2G) telecom licences.
In a 28 September note, DoT interprets a law ministry ruling on the term “associate” to say that Swan was a front for Reliance, which isn’t allowed under the rules. Mint has reviewed a copy of the note.
The move by DoT could lead to confusion because legal analysts and defence lawyers in the ongoing 2G case hold that the law ministry’s definition will prevent the prosecution from proving that Swan and Reliance are associate companies.
It’s not immediately clear what effect the DoT note will have on the 2G case, although it appears to favour the prosecution.
Reliance and Swan have refuted CBI’s claims in its chargesheet that Tiger Traders, which held a majority stake in Swan, was an “associate” of Reliance. The rules don’t allow a mobile phone company to own more than a 10% stake in two telcos operating in the same circle.
Three senior Reliance Group officials as well as the promoters of Swan Telecom have been arrested and are defending themselves in the 2G court on this issue.
Also connected to the DoT note is an earlier petition before the Supreme Court that sought the cancellation of all 122 2G licences issued by former Union telecom minister A. Raja in 2007-08. The court concluded hearing arguments on this petition earlier this year and has reserved its judgement on the matter. The petitioners in the licence cancellation case had made similar points before the Supreme Court as expressed in the DoT note in the move to terminate Swan’s licences.
“The case file is, therefore, submitted for kind consideration and approval of draft show-cause notice to Etisalat DB Telecom Pvt. Ltd for termination of 13 UAS (unified access services) licences issued to the company in year 2008, as per DFA at 23/C duly vetted by the ministry of law and justice with the approval of the honorable minister of law and justice,” said the DoT note.
Union telecom minister Kapil Sibal will decide on whether to issue a notice to Etisalat to terminate its licences on the ground that the issuance was void from the beginning.
“No final decision has been taken as of now,” DoT secretary R. Chandrashekhar said on the issue.
Another senior DoT official, requesting anonymity, said a decision on the issue was likely to be taken by the end of this week.
After receiving the notice, the companies will have 60 days to respond, based on which they are likely to go to court to obtain a stay on the matter, the second DoT official said.
Reliance Communications declined to comment.
The telco has said, on earlier occasions, that it has always been in full compliance with all applicable laws, rules and regulations, and that there has been no violation of the licence conditions at any stage on account of crossholdings in excess of 10%.
Etisalat had not responded to an email requesting comment at the time of going to press.