TRAI, CAG recommendations to hang up on Telenor, Etisalat and Sistema pending for 14 months
If India today is facing diplomatic pressure from Norway, Russia and the United Arab Emirates (Dubai) — all of whom have invoked bilateral treaties to stave off the cancellation of telecom licences for Telenor, Sistema and Etisalat respectively — the Department of Telecom's failure to act on fraudulent applications and licence violations by these firms even 14 months after these were highlighted by the CAG and the Telecom Regulatory Authority of India (TRAI) is largely to blame.
This is because the failure to meet rollout obligations was that of the joint-venture company which held the licence, and occurred after the foreign investor had come in as a partner. Any licences cancelled on account of licence violation do not allow recourse of the kind that the governments and foreign partners are demanding on the plea that they are innocent victims of an illegal act by a Cabinet Minister of the Indian government.
Etisalat DB Telecom Private Ltd, which has Etisalat of Dubai as a foreign partner, obtained 15 licences, including 2 acquired from Allianz Infratech; Unitech Wireless with Telenor of Norway 22 licences; and Sistema Shyam Teleservices, with Sistema JSFC of Russia, 21 licences in January 2008 as a result of jailed ex-Telecom minister, A Raja's illegal actions.
Sistema was issued start-up CDMA spectrum within 45 days, between April 3 and May 29, 2008, while Etisalat and Unitech were issued start-up GSM spectrum between April 22, 2008 and January 9, 2009.
Under the terms of the licence, these companies were required to cover at least 10 per cent of district headquarters in non-metro service areas, and full coverage in metro areas within one year of the date of allocation of start-up spectrum.
In essence, Unitech, Etisalat and Sistema Shyam's clock for rollout violations started ticking on a circle-wise basis from April 2009. But though these companies failed to rollout services in most service areas, the DoT under Mr. Raja refused to take any action.
Acting suo moto motu, the TRAI, in November 2010, issued recommendations to cancel 38 licences and seriously consider the cancellation of an additional 31. Of these 69, all 15 of Etisalat's licences were liable for cancellation, 8 of Unitech/Telenor and 11 of Sistema Shyam — for failure to comply with rollout obligations. The TRAI also recommended imposition of financial penalties on 13 of Unitech/Telenor's licences and 9 of Sistema Shyam's for the same violation.
On November 16, 2010, the CAG, in its report on the 2G scam, estimated the loss to the exchequer at Rs. 1.76 lakh crore. The report revealed that as many as 85 of the 122 licences had not satisfied eligibility conditions prescribed by the DoT at the application stage. Listing a range of violations, it concluded: “85 licences were issued to companies which suppressed facts, disclosed incomplete information, and submitted fictitious documents to the DoT, and thus used fraudulent means for getting the UAS licenses and thereby access to spectrum.” These 85 licences included all 15 of Etisalat and all 22 of Unitech/Telenor's licences.
By mid November, Mr. Raja had to resign under pressure from the Supreme Court and the CAG report.
In effect, by November 18, 2010, the government had two sets of statutory findings that allowed it to cancel these licences on account of fraudulent applications (CAG) and violation of licence conditions (TRAI). But rather than acting swiftly, the DoT got into a slugfest with the TRAI on the very definition of rollout obligation, contesting the TRAI's data and procedure adopted for reaching its recommendations. It also sought the Law Ministry's opinion — ensuring further delay.
Dragging its feet on the TRAI's recommendations, the DoT issued show-cause notices for the cancellation of just 2 of Etisalat's 15 licences and 1 of Sistema Shyam's 11 licences, over the next 9 months while leaving Unitech's 8 licences untouched. However, to counter Parliamentary questions and media reports on its inaction on August 31, 2010, the DoT later issued show-cause notices for licence cancellation to all companies, including these three.
Inexplicably, not a single licence has been cancelled till date, even though their timely and process-driven cancellation would have minimised the present threat posed by foreign governments and investors.
Similarly, show-cause notices for cancellation based on the CAG's report were issued to these companies within a month and replies secured by mid February 2010. However, in this case too, not a single licence of Etisalat or Unitech has been terminated.
Had the DoT acted, the foreign partners of these firms would have sued their Indian partners for misrepresenting warranties through submission of fraudulent applications to access licence/spectrum through devious means, rather than pressurising the Indian government.
Multiple attempts to elicit information about the show-cause notices issued on account of violations confirmed by both the TRAI and the CAG and replies received by these companies have been consistently blocked by the DoT. The DoT's plea under Section 8(1)(h) of the RTI Act is that it is facing an ongoing investigation. The government, too, has made no attempt to offer any public explanation for these inexplicable delays.
Even if the DoT acts now, within 4 months and before the expiry of the Supreme Court's May 1, 2012 deadline for the cancellation of licences, it can still wriggle its way out of the multiple diplomatic traps confronting India by reducing the matter to a commercial dispute between companies rather than a bilateral issue between countries.