DoT in a bind over JPC fiat on licensees data

Written by Ronojoy Banerjee | Ronojoy Banerjee | Rishi Raj | New Delhi | Updated: Aug 11 2011, 07:04am hrs
The ministry of corporate affairs has been of little help so far to the department of telecommunications (DoT), which wants to cull out the changes in the shareholding pattern of all telecom licensees since 1994, the year the telecom sector was opened to private sector participation. The DoT wants this information because the joint parliamentary committee (JPC) looking into the 2007-08 2G spectrum scam has sought this from it.

Such is the pressure for this piece of information that DoT secretary R Chandrasekhar wrote a letter to telecom minister Kapil Sibal on August 4 expressing difficulties in obtaining the data for the pre-2005 period.

The issue is simple: When former telecom minister A Raja issued licences to nine companies in January 2008 at 2001 rates of R1,651 crore, two companies Swan and Unitech Wireless went ahead and diluted equity in September that year in favour of Etisalat and Telenor, respectively.

The valuations were much higher than the price at which the companies had got the licences. Since these companies were totally new in business and had no network and subscribers it was felt that the valuation was due to the cheap spectrum they got with the licences. Later, even Tata Teleservices and S-Tel inducted foreign partners.

When allegations of shortchanging the government started appearing, Raja made a rule that no new licensee could sell its stake within the first three years of getting the licence. Since Swan and Unitech Wireless had not divested equity but inducted foreign partners by issuing fresh equity, it was said that the money remained within the company.

Prior to this there was no such lock-in clause on telecom licensees. All they had to adhere to were the FDI cap and the 10% cross-holding norm. Therefore, experts say, it is incomprehensible why the JPC needs this data and what purpose would it serve. Further, according to the licence condition, every time the licensee undergoes changes in its shareholding pattern, it has to report the same to the licensor. Clearly, this has not happened or else the DoT would have the data.

In his letter to Sibal, the DoT secretary writes: I have been following up with secretary corporate affairs...Yesterday, we had received some raw data regarding three companies, namely Etisalat DB (Swan), Loop and Tata Teleservices. This data is being sifted to obtain the relevant information. Similar information is being sought in respect of other companies, he wrote.

Chandrasekhar has written that the MCA secretary has informed him that the post-2005 information is available in digital form and would be provided soon. However, the pre-2005 information is scattered across different RoCs and much of it is in the form of non-digital records. Since this involves ferreting out old records physically, this may take a longer time than the post-2005 information, he has informed Sibal.