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Retrofit: A telecom scam of epic proportions

Guest Column
Retrofit: A telecom scam of epic proportions

Author | Sandeep Bamzai | Wednesday, May 19,2010 8:00 AM

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Guest Column<br>Retrofit: A telecom scam of epic proportions

When media gets that bit between its teeth, it is very difficult to shake off. More so, when the electronic media is involved. As Parliament was coming to a close, the Telecom Minister A Raja tapes rocked the nation. At first, Headlines Today aired the transcripts, but when Raja refused to bite the bait, saying that it wasn’t his voice on the tapes, Headlines Today nailed his lie fairly and squarely despite enormous legal pressure. The tapes, when they were aired, were a bombshell as the voices were unmistakably the Telecom Minister’s and a top female lobbyist’s. All hell broke loose because the conversations showed that the Telecom Minister from UPA 1 was lobbying for the same portfolio with a lobbyist. All this long before the Cabinet was sworn in. The Prime Minister’s sole prerogative had suddenly been usurped by an all powerful lobbyist. Anyway, the Opposition turned into rabble rousers and the AIADMK went on the rampage in Parliament. But strangely, the principal Opposition party maintained its distance from the controversy as speculation was rife in the Capital that some of its top leaders were also involved with the same lobbyist and due to this proximity, they did not want to be ensnared in the maelstrom.

Just as the Raja tapes reached a crescendo, the Parliament session ended and a brilliant expose fell virtually flat on its face. Its lifespan curtailed. The Opposition in any case in disarray conveniently forgot its job of haranguing the treasury. Elephants and camels were intrepidly and conveniently brushed under the carpet. The investigation was not taken to its logical culmination. Why? Primarily, because the rest of media hardly stepped up to the plate. Either Raja or the lobbyist had got to nearly all of it or nobody wanted to tango such powerful personages. I must add that ET did carry a couple of stories, Pioneer did a sterling job and HT, surprisingly, put all the Government investigation missives on its webiste - http://www.hindustantimes.com/News-Feed/india/Phone-taps-PC-allays-House-fears/Article1-537357.aspx.These letters are a slam dunk indictment of all that is wrong with governance.

But what was essentially a matter of propriety, probity and integrity became farcical because media pushed the real story out and ran detailed reports on lobbyists - Outlook did a cover, Sunday HT ran a full page, but the impressive Headlines Today investigation died a natural death. The rest of English and Hindi electronic media chose to turn a blind eye to the event. Sad and a trifle unfortunate too. In many ways a travesty. For the most telling image was of a young Headlines Today reporter in Chennai being pushed away by A Raja’s men. Not since the days of the vintage Indian Express of the latter half of the 1980s had I seen a rocking and sustained campaign like this. As Express went after Reliance and the late Rajiv Gandhi government, it became a symbol of crusading and the very embodiment of being fearless and upholder of the truth. Remember Mohan Katre and ‘needle of suspicion’ among the long line of deadly dangerous stories and the dripped-in-vitriol pen of one of the greatest journos of his time – Arun Shourie. It is a time that can never return in Indian journalism. It was an age when innocence was betrayed, it was found that symbols and images of power had clay feet and of course it reaffirmed the might of the pen like never before. Indian Express was the tallest newspaper of that generation and this seamlessly morphed into the Harshad Mehta engineered securities scam in the earlier 1990s. Though my old friend Sucheta Dalal broke that story and threw down the gauntlet at other journos, it was picked up by a team of reporters at Express led by Raghu Nandan Dhar, which just didn’t leave that bit between its teeth to write some outstanding stories.

But Headlines Today just for a brief while reminded me of that age. I was a lowly reporter in Indian Express at that point in time and can never forget those years till the time I die. But what is at the core of the expose? Yes, ministerial propriety and probity undoubtedly, but more than that it is a gargantuan telecom scam. And Pioneer needs to be credited for chasing it down. India’s sunshine sector - telecom - has been mired in litigation, blood feuds between operators, including back door entries, cash in mattresses and what have you. And yet it is part of every individual’s axis - work, play, call it what you want. This is a telecom scam of epic proportions.

I will explain how: With the passing of each day, the Government’s kitty swells in an unimaginable manner. Despite tactical and strategic bidding, remember that excess demand has been seen only in five circles, negative demand in as many as 13 circles. On Tuesday, the total realisation from the 3G auction crossed Rs 65,000 crore and change. That is what the Government will garner through the asset sale of precious national resource - spectrum. This is much higher than the anticipated budgetary proceeds of Rs 35,000 crore. Almost parallely, telecom regulator TRAI put out its recommendations to peg 2G prices at 36 auction rates. Do you know what this does? It de-validates the hypothesis floating around the city of Delhi that A Raja’s farcical first come first served sale of licences a couple of years back to realtors was above board and, more importantly, based on TRAI recommendations. The loss was not merely notional, but real. And let me tell you how.

Pan Indian licences in 3G auction have gone for approximately Rs 16,000 crore plus. Right? So, let us do our math now. Rs 16,000 crore for 5 mhz spectrum over 22 circles, correct? I am rounding off all numbers here and hence, it works out to Rs 145 crore per mhz of the precious commodity (16,000 divided by 5 divided by 22). Tellingly, with 2G pegged at 3G rates courtesy TRAI in its 20X avatar, this works out to Rs 17 crore per mhz as the rate at which realtors were given out licences last time round. Did I hear, shocking? Now, eight times 17 works out to close to Rs 136 crore, which means that real price discovery has already taken place. But the Department of Telecom chose to ignore it in its wisdom.

Let me explain how? Swan Telecom sold shares to UAE’s Etisalat at a valuation of Rs 9,600 crore or at 7.5 times of the price that it paid (Rs 1,537 crore for 13 circles) while another realtor, Unitech, sold shares to Norway’s Telenor at a valuation of Rs 11,000 crore, or at eight times the price that it paid for 22 circles - Rs 1,651 crore. In effect, this acted as a price discovery mechanism for the future. And the 3G auction has revalidated this pricing of eight times, but the only harsh reality is that while the Government got a pittance in 2G, the realtors pocketed big bucks without so much as a by your leave. The bottomline is that there is no notional loss, but a real loss to the exchequer. The only difference being that a private auction conducted by Raja and those in cahoots with him replaced a big bang bruising public auction like the one on for 3G. Meanwhile, due to these policy and regulatory faux pas, operators are discovering the real cost of operations in India. Bharti Airtel, Vodafone and others now have to pay additional amounts for use of 2G spectrum, while new players handed out largesse by Raja get away scot free.

Shashi Tharoor was snuffed out by media for a lot less. How I wish media had kept the bit between its teeth and brought the Telecom Minister and the lady lobbyist crashing down. Instead, large swathes of media chose to deliberately ignore this dramatic happening and investigation conducted by some of the smaller players in the media vector. The primacy of news has been re-established. There are others who will turn around and argue that these leaks may have been inspired. But that doesn’t take away the suzerainty of two important things - some were bold enough to take a chance and go with the story and of course the ‘paramountcy’ of truth. The tapes do exist, the nexus has been established beyond doubt and the loss to the exchequer is real and not notional. Check the aformentioned link on Hindustantimes.com website to understand the gravity and enormity of the investigation. Finally, a word on the two principal investigators -

Vineet Agarwal of CBI and Milap Jain of DIT - both of whom were transferred earlier this year. I guess with them died the investigation as well.

(Sandeep Bamzai is a well-known journalist, who started his career as a stringer with The Statesman in Kolkata in 1984. He has held senior editorial positions in some of the biggest media houses in three different cities - Kolkata, Mumbai and New Delhi. In late 2008, he joined three old friends to launch a start-up – Sportzpower Network – which combines his two passions of business and sport. Familiar with all four media – print, television, Internet and radio, Bamzai is the author of three different books on cricket and Kashmir.

The views expressed here are of the writer’s and not those of the editors and publisher of exchange4media.com.)

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