Supreme Court cancels 122 telecom licences held by 8 operators

NEW DELHI: The Supreme Court ordered revocation of 122 telecom licences held by eight operators issued under the 2G sale of January 2008.

However, this is likely to affect less than five per cent of a market which has over 15 players.

The Comptroller and Auditor General had assumed the presumptive loss of up to Rs 1.76 lakh crore. The 122 licences were given for over Rs 90 billion, while 3G auctions for a smaller number of licences had fetched the government a sum of Rs 690 billion.

The licences affected include those held by Unitech Wireless, a joint venture of Norway‘s state-backed Telenor and Indian real estate firm Unitech, which has been the most aggressive of the newer operators and had more than 36 million subscribers in the country in December.

Affected licence holders can operate for four months, during which regulators will come up with new market rules.

The Telenor joint venture, which operates under the Uninor brand, said in a statement: "We have been unfairly treated as we simply followed the government process. We are shocked to see that Uninor is being penalised for faults the court has found in the government process." Shares in Telenor fell 3 perc ent in early trade.

Carriers whose licences were ordered to be revoked also include those of the local joint ventures of Abu Dhabi‘s Etisalat, Russia‘s Sistema Shyam, Loop Telecom, Sistema Shyam, S Tel, Videocon, Tatas and Idea.

"Once a copy of the decision is received, Etisalat will work closely with EDB’s management and legal counsel to understand the judgment, its ramifications on the operations of EDB, particularly its customers and employees as well as its right to a review of the Supreme Court’s decision," Etisalat said in a statement issued from Abu Dhabi.

"The Supreme Court decision relates to events that occurred in January 2008, well before December 2008 when Etisalat invested in Swan. Etisalat has no knowledge of what occurred in the license application process for Swan, far less did it have any involvement. The license applications were entirely conducted by the promoters and their associates who subsequently marketed the Swan investment opportunity to Etisalat through a well known international investment bank," the statement added.

Licenses had been issued by A Raja during his tenure as Telecom Minister. The verdict on cases filed by Dr Subramaniam Swamy and by the Centre for Public Interest Litigation and others were delivered by Justices G S Singhvi and A K Ganguly, who retires today.

The judgment written by Justice Singhvi said the licences granted to the private respondents on or after 10.1.2008 pursuant to two press releases issued on 10 January 2008 and subsequent allocation of spectrum to the licensees are declared illegal and are quashed, and the direction will become operative after four months.

The Court said that the Telecom Regulatory Authority of India (Trai) will make fresh recommendations for grant of licence and allocation of spectrum in 2G band in 22 Service Areas by auction, as was done for allocation of spectrum in 3G band, within two months.

It said the Central Government shall consider the recommendations of Trai and take appropriate decision within next one month and fresh licences may be granted by auction.

It said three of the parties including A Raja who were benefited by a wholly arbitrary and unconstitutional action taken by the Department of Telecommunications for grant of UAS Licences and allocation of spectrum in 2G band and who offloaded their stakes for many thousand millions more in the name of fresh infusion of equity or transfer of equity shall pay cost of Rs 50 million each. Three others were asked to pay cost of Rs 5 million each because they too had been benefited by the wholly arbitrary and unconstitutional exercise undertaken by the DoT for grant of UAS Licences and allocation of spectrum in 2G band.

The Court said 50 per cent of the cost shall be deposited with the Supreme Court Legal Services Committee for being used for providing legal aid to indigent litigants. The remaining 50 per cent cost shall be deposited in the Prime Minister’s Relief Fund. However, it said the observations and conclusions contained in the order ‘shall not, in any manner, affect the pending investigation by the Central Bureau of Investigation, Directorate of Enforcement and others agencies or prejudice the defence of those who are facing prosecution in the cases registered by the CBI and the Special Judge, CBI shall decide the matter uninfluenced by this judgment.’

Police have charged six companies and 19 people, among them a billionaire owner of the Essar Group; top executives of Telenor‘s and Etisalat‘s India ventures and three from billionaire Anil Ambani‘s Reliance Group. Executives arrested in the telecoms case have been released on bail. Two ministers, including Raja, have resigned. Raja is in jail awaiting trial.

India is the second-largest cellular market in the world by subscribers, with 894 million at the end of December, although fierce competition means call rates are among the lowest.

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