Government refutes impropriety charges in spectrum allocation

November 7th, 2008 - 4:21 pm ICT by IANS  

New Delhi, Nov 7 (IANS) Reacting to the charge by the Communist Party of India-Marxist (CPI-M) that the allocation of radio frequency to mobile telecom operators had resulted in a $13-billion loss to the country, the government Friday said promoters of the contract winners, Swan Telecom and Unitech, had not sold out but had merely issued new shares and brought foreign investment into the country.”Regarding the sale of shares by Swan and Unitech, the foreign buyers have entered into agreements to subscribe to the new equity shares of the company and no share of the founding promoters of this company has been sold,” Communications and IT minister A. Raja told reporters here.

He further said that the New Telecom Policy of 1999 has been the bedrock of issuance of licence and allocation of spectrum.

Swan Telecom and Unitech had sold stakes in their companies and booked huge profits after successfully bidding for new spectrum.

In a statement Thursday, the CPI-M said the “first-come-first served” principle adopted by the United Progressive Alliance (UPA) government had also resulted in a loss of Rs.60,000 crore (Rs.600 billion/$13.2 billion) to the exchequer.

“The CPI-M is shocked that the UPA government, instead of addressing the huge scam that has taken place in the allocation of the fourth licence in 2G mobile services, has taken the position that nothing needs to be done,” it said.

It said while the mobile phone licences were priced at 2001 levels to keep the costs low for the consumers, this was not ensured through the licence terms, due to which successful parties sold their shares at huge profits.

Swan Telecom, for example, bought a licence for 13 circles along with the necessary spectrum for Rs.15.37 billion ($340 million). Subsequently, it sold 45 percent of its stake to UAE’s Etisalat for $900 million, taking its book value to $2 billion.

Similarly Unitech did not spend a single rupee for executing its licence but sold a 60 percent stake to Norway’s Talenor for Rs. 61.20 billion, while paying only Rs.16.51 billion as licence fee, the party said.

“The government has actually got only one-sixth of what it would have got, had it gone through a fresh auction route - a loss of Rs.100 billion to the exchequer on account of Swan and Unitech licences alone,” the CPI-M said.

“The issue is: If scarce national resources are given away at throwaway prices and these are then sold at many times that price, what should the government do?” the party queried.

“It should either invoke fair trade practice/anti-monopoly sections, or look at other operative sections of the licence to see how this can be prevented. If no other recourse is available, it must levy a windfall tax on such speculative transactions.”

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