Days after the Supreme Court cancelled 122 licences for 2G spectrum, Prime Minister Manmohan Singh on Saturday held consultations with senior Cabinet colleagues on its impact on the overall telecom sector and the way forward.
The meeting was attended by Finance Minister Paranab Mukherjee, Home Minister P. Chidambaram, Telecom Minister Kapil Sibal and Law Minister Salman Khursheed. Attorney-General G.E. Vahanvati and Telecom Secretary R. Chandrashekhar were also present.
“This meeting was to inform senior Ministers as to what are the implications and ramifications of the judgment. This group was not meant to take any decision,” Mr. Sibal told journalists later.
Mr. Chandrashekhar apprised the meeting about the finer points of the judgment and its impact on the telecom sector, amidst fears that the foreign direct investment flow could be affected.
The Telecom Secretary gave a “full presentation on what the judgment is about, what it means and when we move forward,” Mr. Sibal said.
“Ultimately all the matters have to go to the Cabinet, so the government has to be informed before that in order to take a decision,” the Telecom Minister added.
The meeting also reportedly deliberated upon the auction, which is to be carried out for nearly 546 mhz of 2G spectrum vacated by nine telecom operators.
In this context, the Telecom Regulatory Authority of India (TRAI) has floated a pre-consultation paper seeking comments from stakeholders on guidelines for spectrum auction, as directed by the Supreme Court.
The situation has become difficult with some foreign operators such as Norwegian Telenor and Russian Sistema, whose licences have been cancelled, are putting pressure on the government, asking it to safeguard their investments.
Telenor, a majority shareholder in Uninor, claims to have invested over Rs. 14,000 crore in Indian operations while Sistema, a majority joint venture partner in Shyam-Sistema, has pumped in over $2.5 billion (about Rs. 12,000 crore).
Both are likely to participate in the coming auction of 2G spectrum to continue their operations and secure investments.
Last week, the Supreme Court cancelled 122 2G licences granted during the tenure of Telecom Minister A. Raja, declaring it “illegal” and blamed the government's flawed first-come-first-served policy.
According to sources, the Telecom Ministry is likely to send, within a week, letters to new operators for termination of their licences. This was discussed in the Department of Telecom's internal meeting to discuss the implications of the Supreme Court order and way forward in this regard.
The members discussed various issues, including sending communication to licensees for termination of licence agreement, refund of licence fee in respect of 85 licences who were declared ineligible, and similarly for the remaining 37 licences.