Other factors: sale of equity by 2 new licensees, higher rates S Tel offered to pay in 2007

Though the Congress on Saturday questioned the “presumptive loss” to the exchequer, from the sale of 2G spectrum, at Rs.1.76 lakh crore as assessed by the Comptroller and Auditor-General of India, its argument to defend the government is based on wrong facts.

At a press briefing here, Congress spokesman Manish Tewari claimed that the CAG used the case of a “defaulter” company — S Tel — as a benchmark for computing the Rs.1.76-lakh crore loss, but the government auditor's figure is based on the prices achieved by the Department of Telecommunications (DoT) from the 3G spectrum auction.

The CAG has said its criterion for working out potential loss to the exchequer is based on three scenarios — on the basis of the 3G spectrum auction; on the basis of sale of equity by two new licensees, and on the higher rates of spectrum S Tel offered to pay in 2007.

The CAG report says: “It was amply demonstrated between September 2007 and December 2008 that its [spectrum] demand in view of its scarcity was at its peak, and thus would have fetched the market determined price at a much higher level than that of 2001 entry fee.”

On the basis of the 3G rates, the value of 2G spectrum allocated to 122 licensees in 2008 works out to Rs.1.02 lakh crore against the Rs. 9,014 crore realised by the DoT. Similarly, for radio waves allotted under the dual technology, the value would have been Rs. 37,154 crore as against Rs.3,372 crore collected, while for spectrum given to companies beyond their contracted quantities, the value comes to Rs. 36,993 crore against Rs. 2,561 crore realised.

The CAG report also highlights that the public exchequer got Rs.1.03 lakh crore from the auction of 3G and wireless broadband spectrum against the government's own estimate of Rs. 35,000 crore.

The CAG report says that in 2007, S Tel wrote to Prime Minister Manmohan Singh and offered “to pay a higher price in the shape of additional revenue share for next 10 years.”

“The offer was enhanced by the firm with a stipulation to further revise it upwards, in case of any counter bid. At the prices offered by the company [S Tel], the value of 122 new licences and 35 dual technology licences, after discounting for the receivables in future years, works out to Rs. 65,909 crore as against Rs.12,386 crore actually received.”

Similarly, the CAG report cites the cases of two new licensees — Unitech (brand Uninor) and Swan (now Etisalat DB) — which made several crores by selling their stake to multinationals. “The value of a new company, with no experience in the telecom sector, can primarily be taken as that of the licence and access to spectrum. This would have been the prime consideration for foreign companies while infusing large amount of capital in the form of equity in these companies shortly after award of licence,” the report says.

“Based on this indicator, the value of a pan-India licence works out between Rs.7,758 crore and Rs. 9,100 crore as against Rs.1,658 crore priced by the DoT. The total value for 122 new licences and 35 dual rechnology licences would be between Rs.58,000 crore and Rs.68,000 crore as against the actual revenue of Rs.12,386 crore realised.”