In a decision that surprised the industry, the Empowered Group of Ministers (EGoM) on telecom headed by Home Minister P. Chidambaram, on Tuesday deferred the decision on the one-time spectrum fee to be charged from existing telecom operators till the Supreme Court gives its opinion on the Presidential Reference.
The government filed a Presidential Reference in April, nearly 2 months after the February 2, 2012 judgement, cancelling 122 licences granted illegally by ex-Telecom Minister, A. Raja. Reciting telecom history from 1994 till 2010, the Presidential Reference poses eight questions. Of these, four are specific to telecom licences and spectrum pricing with the rest spread across issues of mandatory auctions across all natural resources and the scope of the Supreme Court’s intervention in government policy making.
Briefing the media, Telecom Minister Kapil Sibal said, “all issues were placed before the EGoM and the EGoM decided that we will wait for the outcome of Presidential Reference and then decide on these issues.”
The Hindu was the first to point out in an article ‘Presidential Reference on 2G flawed on facts and logic’ dated April 12, 2012 — the same day that the Presidential Reference was filed in the Supreme Court — that this move could generate uncertainty, adversely affecting government decision making and investor confidence.
Voicing a similar view, Director-General of Cellular Operators Association of India (COAI), Rajan Mathews said on Tuesday, “this deferred decision by the EGoM will only aggravate the clouds of uncertainty and investor despondence in the telecom sector.”
The decision by the EGoM on the one-time charge could now be derailed for months since the Presidential Reference hearing has multiple parties arguing multiple questions and representing a diverse set of views.
Mr. Sibal said: “We are now moving to Cabinet with a comprehensive note with reference to all decisions that we have taken so far.”
The issue of one-time spectrum charge has been undecided — first because the full Telecom Commission refused to take a decision and later the Cabinet on July 3, referred the matter to the EGoM. With the decision now pending till the Supreme Court gives its final decision on the Presidential Reference, revenue worth thousands of crores arising out of the one-time charge could face an uncertain future and delay which the government can ill afford.
The government had on the one hand requested a decision on the payment of one-time spectrum charge in its draft Cabinet note, while on the other, it simultaneously asked the Supreme Court’s opinion on the same question leading to this impasse in decision making.