2G scam: Trai recommends cancellation of 62 licences

2G scam: Trai recommends cancellation of 62 licences

New Delhi: In a swift action against new telecom players who were given licences in 2008, telecom regulator Trai on Thursday asked 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 today owing to the companies’ non-compliance or irregular roll-out of network, as laid down in the contract.

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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 Rs1.76 trillion 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 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.

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 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% district headquarters in other service areas within 12 months of the date of award of licences.

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 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).

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 16 November.

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.