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Retrofit: The murky world of telecom licensing

Guest Column
Retrofit: The murky world of telecom licensing

Author | Sandeep Bamzai | Wednesday, Mar 17,2010 8:49 AM

Guest Column<br>Retrofit: The murky world of telecom licensing

Delhi’s seamy underbelly always has a rumour or two doing the rounds. If it is not about politicians, then it is about the vast army of fixers who inhabit the corridors of power. For the last month or so, the grapevine has been buzzing with news of the two coming together to defraud the exchequer. Throw in the odd retired bureaucrat and malleable and ductile media and you have a potent fix or combine, whatever you want to call it. So, what is new, you might ask? After all, this is the norm in saadi dilli. But this time, there is one small twist. Sections of media are reporting this unholy nexus. It all began with a top corridors of power gossipy website www.powerbuzz.inreporting that the “CBI is currently investigating the role of the country’s number one lobbyist in the award of a Unified Access Services (UAS) telecom license to Unitech in 2007-08. It may be recalled that UAS (Unified Access Services) licenses were floated in early 2007 by the Ministry of Telecommunication and immediately came under a cloud of controversy for alleged financial muddling. The CBI took over the investigation after a criminal case was registered under the Prevention of Corruption Act. It sought information from the Directorate General of Income Tax about certain middlemen and companies that were actively involved in the criminal conspiracy.

“The lobbyist’s phones were placed under surveillance by the Finance Ministry and Home Ministry for a 180-day period during which some intercepted calls point to the deep nexus between key officials of the Telecom Ministry, some telecom operators and the lobbyist. Some intercepts also indicated that the lobbyist uses media to influence Government decision-making. According to sources, the lobbyist set up a lobbying company a year ago with three senior ‘pen-drive’ bureaucrats of the Telecom Ministry, and whose recent activities in Africa, too, are under investigation by intelligence agencies. The intercepted phone calls reveal conversations relating to influencing the appointment of ministers and officials. Preliminary investigations hint that the same group had a role in the award of telecom licenses. The Cabinet Secretariat is believed to be personally monitoring the status of these investigations.”

One took this nugget of information with a bucket full of salt. After all, what credibility does a gossipy website have, you could aver? Some would say it is nothing more than gossipy trash. But on Monday morning, Mail Today in its popular ‘Raisina Tattle’ column had this to report: “A high profile lobbyist, who has accounts, which are the envy of those in the trade, is believed to be facing the ire of the Central Bureau of Investigation. The agency is said to be in possession of some tapes of conversation between the lobbyist and several decision makers on the Telecom Ministry’s Unified Access Services.” Whoa, now this was a whole new dimension being added to ‘trashy’ gossip. It was being given legitimacy because Mail Today would not have written this without some element of due diligence. And mind you, a lot of what Mail Today has reported also appeared on and I am certain that the two are unrelated. The bare bones of the gossip, in fact, are almost identical, which leads you to think that something serious is afoot. Or as Sherlock Holmes would say - the game is afoot!

But, slow down, there is more from Mail Today, which went on to write, “UAS licences were floated in 2007, but later came under scrutiny for financial muddles.” I thought to myself… wait a minute; didn’t the CBI raid the Department of Telecom last October in an unprecedented move. I found this story dated October 23 in The Times of India archives – “In an unprecedented move, the CBI on Thursday raided the offices of the Department of Telecom (DoT), alleging criminal conspiracy between DoT officials and private firms in the allotment of 2G spectrum. TOI was the first to report the unusual twists and turns in DoT’s decision-making process in the matter, and closely followed the sequence of events from July 2007 – when the rush for new telecom licences began – to January 2008, when spectrum was allocated to the new entrants – right up till November 2008, as the controversy snowballed.”

But back to Mail Today for a moment – “The conversations reportedly have important pointers on how some new telecom holders acquired licences. The CBI took over the investigation after a criminal case was registered under the Prevention of Corruption Act. It is alleged that surveillance of telephonic conversations during the 180-day period unravelled the nexus between key ministry officials, some telecom operators and the lobbyist. It seems, interested groups are hyperactive in telecom, and the lobbyist is caught in the crossfire.” Which begs the question - who is this all powerful lobbyist who can manage the environment so effectively and efficiently? Delhi’s power pavements abound with lobbyists, fixers and powerbrokers, and your guess is as good as mine on who this specific individual is?

If you are wondering why I am rewinding and fast forwarding so quickly, then to understand the dynamics of this scam, we need to revisit last October’s TOI story, for it provides an all encompassing perspective on the DoT raid. Here goes, “CBI officials said a case under the Prevention of Corruption Act had been registered against unidentified DoT officials and ‘private persons’ before the raids were carried out in the Wireless Planning Cell (WPC) and in the office of the Deputy Director General (Access Services) at Sanchar Bhawan. According to the agency, all records pertaining to the allocation of spectrum to new entrants in January 2008 are being examined to ascertain whether or not there was any irregularity in the process. It is learnt that AK Srivastav, DDG Access Services 1; Ashok Chandra, Wireless Advisor and PK Mittal, DDG Access Services Cell 11, the senior officers in charge of these divisions, were taken to CBI headquarters for questioning. The CBI raid started at 10 am and finished at around 6 pm.

“The Central Vigilance Commission (CVC) had earlier asked CBI to probe alleged irregularities in the award of Unified Excess Services Licenses to private companies and the resultant loss of Rs 22,000 crore to the Government. As per information received, there was criminal conspiracy between certain officials of DoT and private firms in order to award licences to these companies by putting a cap on the number of applicants against recommendations of the Telecom Regulatory Authority of India (TRAI) and by awarding licences to private companies on first-come-first-serve basis on the rates of 2001 without any competitive bidding,” said a senior CBI official.

“The CVC had asked the CBI to investigate the identities of all beneficiaries in two companies that had bought stakes in Swan Telecom and Unitech Wireless Services. The two licencees had sold their stake even before they rolled out services for which they had been awarded licences. Unitech and Swan sold their equity to Telenor and Etisalat, respectively, at roughly Rs 9,000 crore to Rs 10,000 crore each – or six to eight times the price at which they had received the spectrum from the Government. Sources said though there was no quantification done on what was the loss to the Government on this account, a rough estimate based on what these telecom companies earned by offloading their stake could be anywhere between Rs 20,000 crore and Rs 22,000 crore.

“However, industry watchers claim that the extent of the loss to the exchequer could be as high as Rs 50,000 crore. They point out that DoT gave away 2G spectrum to 120 licencees at roughly Rs 9,000 crore, when the market value was probably closer to Rs 60,000 crore. DoT chose to follow a first-come-first-served (FCFS) process to handpick companies, though it could easily have chosen a global auction for 2G spectrum, as has now been prescribed for 3G. The refusal to hold auctions when demand for spectrum far outweighed its supply marked a departure from the policy of auctioning 2G spectrum till 2001.

“Telecom Minister A Raja had argued that he merely followed TRAI’s recommendations. However, TRAI vehemently denied making any such recommendations. Former TRAI Chairman N Misra had clarified on many occasions, including in a letter to DoT, that his recommendations should be read in their totality. He had accused the Government of cherry picking portions of TRAI’s recommendations rather than following them as a whole. All these developments were reported in TOI. The previous DoT Secretary, DS Mathur, was asked to sign the new licences in 2007, but refused to do so till he retired in December 2007. Once he was replaced, 120 licences were subsequently awarded in January 2008.

“When criticised by the media and the Opposition, Raja said his predecessors, Dayanadhi Maran and Arun Shourie, had followed the same FCFS policy. The big difference, however, was that there was no queue for spectrum during Shourie and Maran’s tenures. At the time that Raja chose to give away spectrum to a select 120 companies, there were already 575 applications waiting and more could have followed. Raja was also accused of abruptly announcing a cutoff date and favouring only those companies that had come in on or before September 25, 2007, even though the Government had officially asked for applications till October 1, 2007. The manner in which spectrum was allocated to companies within the FCFS norm also came under attack as there was no clarity whether winners were being selected based on date of application or date of licence fee payment.”

Curious, no? Wonder which cat died.

(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

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