The continuing debate on the “presumptive loss” to the exchequer in the 2G spectrum allocation process notwithstanding, the Department of Telecommunications may ask new operators to pay more for the spectrum they got along with pan-India licences in 2008 for just Rs.1,658 crore and earned exorbitant profits by selling their stakes to foreign firms.
Government sources said the DoT was in no mood to overlook the huge profits the real estate companies made by selling their stakes to global telecom giants for thousands of crores, while the government got only Rs.1,658 crore as fee for pan-India licence with which came the precious and scarce spectrum. It is also looking at a formula to evolve real price for the additional spectrum given to old operators beyond their contractual obligation.
As it would not be unjustified to charge global giants like Norway's Telenor, the UAE's Etisalat and Japan's NTT Docomo that have taken huge stakes in their Indian partners and invested heavily to build telecom infrastructure, DoT officials say it would only be logical to ask the Indian beneficiaries to share their huge profits with the government. Though there are reservations in the DoT and the government about the amount of loss incurred by the government, everyone believes that exchequer could have earned much more from the sale of 2G spectrum than what it actually got.
“It is obvious that Indian companies that had no experience in telecom space and no physical infrastructure made thousands of crores from the spectrum they acquired by spending just Rs.1,658 crore. Though it would be legally difficult to cancel their licences, they could be asked to pay heavy penalty as there is enough evidence of their manipulating the terms and conditions for licences,” a senior DoT official said.
Notably, as per the Comptroller and Auditor-General of India report, three new GSM licensees made several crores by selling their stakes to multinationals. While Tata Teleservices sold its stake to NTT Docomo for Rs.12,924 crore, Unitech (brand Uninor) made the sale to Telenor for over Rs.6,100 crore, and Swan (now Etisalat DB) to Etisalat for Rs.3,200 crore.
“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 a large amount of capital in the form of equity in these companies shortly after award of licence,” the CAG report said.
“Based on this indicator, 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 Technology licences would be between Rs.58,000 crore and Rs.68,000 crore as against the actual revenue of Rs.12,386 crore realised.” However, as per 3G pricing, the CAG put the loss from 2G spectrum sale in 2008 at over Rs.1.76 lakh crore.
Similarly, the DoT does not want to dilly-dally on the issue of pricing of additional spectrum that the old operators are holding beyond their contractual agreements. The Telecom Regulatory Authority of India (TRAI) is still reviewing its earlier recommendation on price for additional spectrum where it favoured linking it with 3G spectrum prices, which was decried by Bharti Airtel and Vodafone Essar as they hold spectrum much beyond their contractual share.
DoT officials feel that this issue also needs to be addressed urgently and the department is awaiting fresh recommendations from the TRAI. They are sure that the era of relaxations and extensions for mobile operators is over.
Undue delay
In its report, the CAG clearly highlighted that how the DoT made undue delays in recovering money from old operators who held spectrum beyond the contracted quantity of 6.2 MHz even as new operators waited for radio waves.
