Only fresh equity, not spectrum, sold by phone firms: Chidambaram

July 25th, 2011 - 6:03 pm ICT by IANS  

P. Chidambaram New Delhi, July 25 (IANS) Home Minister P. Chidambaram Monday said as finance minister in 2007 he had only examined if private telecom firms Swan and Unitech were inducting foreign partners by issuing fresh equity or selling their assets, such as spectrum.

“In both cases, the prime minister wanted to know if there was any dilution of equity or issue of fresh shares. This was what was examined by the finance ministry. In both cases there was no sale of spectrum,” an aide of Chidambaram quoted him as saying.

“The spectrum was allocated to the company that got the licence. The spectrum remained with that company. The company only issued fresh shares to induct fresh capital. There was no divestment,” the aide further quoted the home minister as telling Monday.

The remarks came shortly after jailed former communications minister A. Raja alleged in the courts Monday that Chidambaram as the finance minister had approved the stake sale by Unitech and Swan in the presence of Prime Minister Manmohan Singh.

The opposition Bharatiya Janata Party (BJP) was quick to react to the former telecom minister’s statement in the court and demanded the resignations of both the prime minister and his home minister.

Raja, now in Tihar Jail, dragged the prime minister and Chidambaram into the controversy saying the transactions made in the allocation of second generation (2G) phone spectrum were known to them and that he had done nothing wrong.

“Telenor buying a stake in Unitech Wireless and Etisalat buying a stake in DB Realty, the finance minister approved it in the presence of the prime minister. Let the PM deny it,” Raja told special Central Bureau of Investigation (CBI) judge O.P. Saini.

The decisions by former telecom minister in 2007-08 have been questioned by the probe agency, saying by issuing spectrum at a mere Rs.1,659 crore ($350 million) for a pan-India operation, he had caused losses worth thousands of crore to the exchequer.

Nine new telecom companies were issued the radio frequency airwaves, a scarce national resource, to operate second generation mobile phone services in the country. As many as 122 circle-wise licences were issued.

The probe agency said the decisions had allowed private players to make undue profits.

A new player Swan Telecom had bought licences for 13 circles with the necessary spectrum for $340 million but managed to sell a 45-percent stake in the company to UAE’s Etisalat for $900 million. This swelled its valuation to $2 billion without a single subscriber.

Similarly, another new player, Unitech, paid $365 million as licence fee but sold a 60-percent stake to Norway’s Telenor for $1.36 billion, taking its valuation to nearly $2 billion, again without a single subscriber.

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