Bells palsy:Trai annuls 62 licences for rollout delays

Here's the bellwether of scams

THE telecom regulator has asked the government to cancel 62 of the 122 licences issued by former telecom minister A Raja under controversial circumstances in 2008 to new companies, including joint ventures of international operators such as Telenor ASA, Emirates Telecommunications Corp and Sistema JSFC, because they had not been able to launch services in time.
    The recommendations of the Telecom Regulatory Authority of India—which claims that its views were ignored by Mr Raja—strengthens the possibility of several licences issued in 2008 being revoked.
    On an action-packed day, the telecom department, under new minister Kapil Sibal, decided to seek legal opinion on the validity of the telecom licences dished out by Mr Raja after the country's national auditor said 70% of these mobile permits were obtained through fraudulent means, an official aware of the development told ET.
    It is also learnt that Mr Sibal convened a meeting of top officials of the telecom ministry to discuss the regulator's recommendations, but ET has been unable to ascertain the outcome of this meeting.
    The Comptroller and Auditor General of India, or CAG, in its report on Tuesday said 85 of the 122 licences given to six companies, notably Uninor, Videocon, Loop Telecom, S Tel, Etisalat and Allianz Infratech, were illegal as these firms were not eligible to obtain them. The auditor added that these six companies had disclosed "incomplete information and submitted fictitious documents and used fraudulent means" for obtaining them. Many companies were allowed to change 'doctored and fictitious documents' later, in some cases even as late as 12 months after they had submitted their applications.
    CAG said most licensees had prior information and even had pre-dated demand drafts, allowing them to jump the queue for spectrum. An earlier probe by the ministry of corporate affairs had also established that these companies were not eligible to receive mobile permits and had submitted doctored and fake documents along with their applications. Telcos missed deadlines
THE companies facing the threat of losing their licences claimed that they were not in violation of the rollout obligations. But, Trai officials said their investigations revealed that 34 licensees had not rolled out services while 28 had launched operations, but failed to meet the minimum criteria as specified in their agreements. India is divided into 22 telecom circles, and pan-India operators get individual licences for each region. Trai chairman JS Sarma, in a note to the communications ministry, said mobile permits held by Loop in 14 service areas, Etisalat DB Telecom in two service areas, Sistema Shyam Teleservices in 10 service areas, and Unitech Wireless in eight areas be withdrawn because of these lapses.
    The regulator further recommended that 13 licences of Etisalat DB, five of Loop Telecom, and 10 of Videocon Telecommunications be cancelled, as the network rollouts undertaken by these companies fell short of the requisite conditions.
    India's telecom regulations mandate that any company with a licence must meet the deadlines for commercial launch of services, and the telecom department has the powers to cancel licences of mobile phone companies in circles where they have not launched services even a year after getting the licence. The six new mobile phone companies had missed several deadlines for launching commercial services. Existing laws mandate mobile companies to provide commercial services in at least 10% of the district headquarters in a circle by the end of the first year. DoT can fine companies 5 lakh a week per circle for the first 13 weeks of delay. The fine goes up to 10 lakh each for the next 13 weeks, and to 20 lakh for delays up to 26 weeks.
    Trai said imposing penalties for failure to roll out services would run into huge amounts. "So, we had suggested that these licences should be cancelled. This would vacate enormous amount of spectrum (radio waves)," the regulator added. CAG had slammed the telecom ministry for not recovering 679 crore as penalty or liquidated damages from six new operators for missing deadlines.
    Refuting the regulator's arguments, Sistema Shyam, in which the Russian conglomerate holds 74% stake, said, "Amongst the new telecom operators, Sistema Shyam Teleservices Ltd (SSTL) was the first company to launch its services." "The company has complied with all its rollout obligations in all the 22 telecom circles and has already secured over 7 million voice subscribers and over 3,00,000 data customers," it said in a statement.
    Norway's Telenor, which holds a controlling stake in Unitech Wireless had earlier warned that any move to cancel licences could impact foreign investment in India.
    "We have not received any information from Trai regarding our licences in India. Therefore, we can't comment on this matter," Uninor said in an emailed statement, while adding that the company has launched its services across India... and is therefore a real operator." Loop Telecom's spokesperson said the company has not 'received any communication from Trai or DoT, and therefore could cannot comment on specifics'.