New Delhi/ Chennai: Fresh media reports of irregularities in the second-generation (2G) spectrum allocation involving former telecom minister Dayanidhi Maran, currently Union textile minister, sent the stocks of broadcasting company Sun TV Network Ltd and airline SpiceJet Ltd crashing on Thursday. The companies are run by his brother Kalanithi Maran.
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The Central Bureau of Investigation (CBI), probing various aspects of the 2G case, added fuel to the controversy by suggesting it has evidence of wrongdoing in spectrum allocation to Aircel during Maran’s tenure as telecom minister between 2004 and 2007.
Maran, the grandnephew of Dravida Munnetra Kazhagam (DMK) patriarch M. Karunanidhi, has been caught up in allegations over a Rs 600 crore investment by Malayasia-based Maxis Group in Sun TV allegedly in exchange for awarding 14 telecom licences to Aircel. Maran is said to have persuaded former Aircel owner C. Sivasankaran to sell his stake to Maxis before awarding the licences.
“If I have done any wrong, I am ready to face any punishment,” PTI cited Maran as saying on Thursday. “I should be given all the opportunity to explain.”
Maran faced more allegations on Thursday when English daily The New Indian Express reported that Maran got Bharat Sanchar Nigam Ltd (BSNL) to lay secret cables to connect 323 lines from his home to the Sun TV office during his tenure.
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“He got BSNL to lay separate and exclusive underground cables from his Boat Club home to the Sun TV office at Anna Arivalayam in Anna Salai and fraudulently linked the 323 home lines to his brother Kalanithi’s Sun TV Network,” the newspaper reported.
Maran, who has already sent contempt notices to Tehelka magazine for its report on the Maxis deal, sent a contempt notice to The New Indian Express and demanded Rs 10 crore as compensation.
A highly placed CBI official said the agency is likely to register cases in both deals.
“We have called Sivasankaran next week to depose before us as a witness. He may take time to give us a statement. But even if he does not appear, we have evidence of wrongdoing in the deal,” a high-ranking investigating official said on condition of anonymity. Another CBI official independently confirmed the same.
“A preliminary enquiry is already underway. But it may take some time before we register a regular case in the deal,” the official added. The agency official indicated that the case will be registered only after the second chargesheet is filed in the ongoing 2G case. The CBI has so far filed a chargesheet and a supplementary chargesheet in the case involving former Union telecom minister and Maran’s party colleague, A. Raja, another party colleague K. Kanimozhi, and several top executives of telecom companies. The agency has informed the Supreme Court, which is monitoring the investigation, that another chargesheet will be filed before 30 June.
After the fresh allegations surfaced against Maran, the CBI said it had been probing the matter. “We had written to the department of telecom (DoT) about BSNL laying cables to Maran’s house. We got the reply in 2009 and it was not satisfactory. Because of the delay, investigations could not move ahead. Now we will again write to DoT seeking clarifications,” said the official cited above said.
Meanwhile, Sun TV, which operates 20 television channels reaching 95 million households, saw its stock price plunge 27.9% to Rs 272.10, while the SpiceJet stock fell 16.06% to Rs 34.50 on the Bombay Stock Exchange (BSE). The benchmark Sensex fell 0.62% to 18,494.18 points.
“It could get much worse,” said a media analyst who has been tracking Sun TV closely. He refused to be named, saying the matter was sensitive. “Till now, Sun TV was the No. 1 media company with the largest market cap in the sector; now it’s at No. 2.” Zee Entertainment Enterprises Ltd is now No. 1, he said.
“When a stock price plunges by 28% in a single day, you know there’s trouble. We are not advising investors to go for Sun TV Network. The stock has hit a 52-week low. It won’t pick up for another year,” added another analyst in Mumbai who tracks media stocks.
Responding to Mint’s queries over the phone, V.C. Unnikrishnan, chief financial officer at Sun TV, said: “These share prices have fallen based on unrelated and baseless allegations made by media. As far as business is concerned, growth continues to be there. Our advertisement revenues have grown by 25% while overall advertising growth (in the industry) remains at 14-15%. If you look at the stock exchange volumes in BSE, only 26% is delivered, and in NSE it is only 18-19%. So, somebody has played on the rumours and made cash on it.”
Unnikrishnan added that “Dayanidhi Maran does not have any shareholding in Sun TV or Sun Direct or any other company”.
Referring to Kalanithi Maran’s share pledge last week, Unnikrishnan said he owns a 77% stake and that the share pledge was minimal. “In the event of the price falling the way it is, there is a likelihood that he may have to pledge a few more shares to do the top up. But if the price comes back to the normal level, the issue will be taken care of.” Revenue and profit have been growing and there is no cause or alarm for worry, he added.
Even as investor sentiment is negative, media buyers say advertisers are unfazed with the developments.
According to Alok Agrawal, chief operating officer, Cheil Worldwide South West Asia, there will be no effect on the channel’s advertising revenue. “Sun TV continues to deliver ratings, engage audiences, and so brands will continue to advertise on the channel. For investors, the decline of the stock price is bad news, but for advertisers, it’s business as usual,” Agrawal said.
But if sentiment continued being negative, it would have an adverse impact on advertising revenue.
Mona Jain, chief operating officer of VivaKi Exchange, the media buying agency for Publicis Groupe SA, agreed that the fall in the stock would have no impact on advertising budgets of various brands. “The reach of Sun Network is immense and it’s the No. 1 player in the southern market,” she said. According to her, 70% of the overall advertising budget for the southern markets in television go to Sun TV.
Abhilasha Ojha in New Delhi contributed to this story.2