Bharatiya Janata Party leader Yashwant Sinha has written to Prime Minister Manmohan Singh, alleging that changes in the telecom sector could cost the exchequer up to Rs. 35,000 crore.

“I am appalled [by] and dismayed at the proposed steep reduction in the spectrum reserve price and spectrum usage charges which will favour a few operators at the cost of the national exchequer,” Mr. Sinha’s letter states.

“As per the TRAI recommendations, the reserve price for 1 MHz of spectrum of a Pan-India basis in 1800 MHz band has been reduced from Rs. 2,376 crore to Rs.1,496 crore or by 37%. In the case of key circles like Mumbai and Delhi, this reduction is much steeper by more than 50%. Similarly, for spectrum in 900 MHz band, the TRAI has proposed a reduction in reserve price in three Metro Service Areas by almost 62%, from Rs.1,718 crore to Rs. 650 crore for block of 1 MHz spectrum.”

Mr. Sinha is a member of the Joint Parliamentary Committee (JPC) which till recently investigated the 2G scandal, and was also Finance Minister in the NDA regime.

TRAI turn

The reduction in the reserve price has been welcomed by industry and telecom associations, but Mr. Sinha says they “contradict the TRAI’s own arguments and approach adopted while recommending spectrum reserve price for previously held auctions.”

“Last year itself, the TRAI defended and justified the reserve price of Rs. 3,622 crore for Pan India 1 MHz spectrum in 1800 MHz band with detailed reasoning and economic logic. It also proved through detailed calculations that the impact of the recommended reserve price on telecom tariff to subscribers will be negligible. I fail to understand why the same body now has junked its own recommendations within one year and has recommended such a steep reduction in the reserve price. This is not expected from a sector specialist regulator.”

Mr. Sinha’s letter alleges TRAI Chairman Rahul Khullar has aided “incumbent operators by steeply reducing spectrum reserve price.”

Sibal shrugs off allegations

Telecom Minister Kapil Sibal, however, shrugged off Mr. Sinha’s criticism. “Mr. Sinha smells a scam at every intersection,” he told The Hindu. “I am surprised that despite having served as Finance Minister, he still doesn’t fully understand the dynamics of the market. The market in 2013 is entirely different from that in 2010 or 2009 or even 2008.”

“The procedure has been followed by seeking the TRAI’s recommendation followed by the Telecom Commission’s endorsement,” he said. “In the next step, the Empowered Group of Ministers will finalise the terms and conditions of the auctions. The attempt to cast a scam taint on this process on the eve of the Lok Sabha elections is highly opportunistic and unfortunate.”

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