Licences seen ineligible by CAG may not enjoy 4-month window

Written by Rishi Raj | New Delhi | Updated: Mar 5 2012, 06:52am hrs
2g scamno bar to scrapping these licences sooner, says dot note
Eighty-five of the 122 licences granted by former telecom minister A Raja in January 2008 could be cancelled even before the four-month window set by Supreme Court (SC) closes. This is because the Comptroller and Auditor General (CAG) report in November 2010 had categorised the winners of these licences now with Uninor, Etisalat DB, Videocon and Loop as ineligible.

A department of telecommunications (DoT) internal note seen by FE says these licences could be cancelled even earlier since the court did not bar cancelling licences won by ineligible applicants pointed by the CAG.

There does not seem to be any bar by the Supreme Court in cancellation/termination of the Unified Access Service Licences on account of ineligibility of the applicant company as pointed out in the CAG report prior to expiry of four months from the date of announcement of the judgment, since when the direction of the Supreme Court, quashing all the 122 UAS licences granted in the year 2008, shall become operative, says a DoT note to telecom secretary R Chandrasekhar.

Charging applicants with failure to meet net worth criteria, breach of cross-holding limits and absence of telecom services in their memoranda of association, CAG had named winners of these licences as ineligible. The DoT has issued show cause notices to these companies on these grounds. All of them have defended their position.

If the DoT cancels these 85 licences early, only Tata Teleservices, Idea Cellular and Sistema Shyam would be able to offer services till the four-month period expires.

Barring Uninor, which has close to 40 million subscribers, other ineligible companies have negligible subscribers.

Last October, DoT secretary

R Chandrasekhar had told FE that his department would like to bring closure on the issue of 85 ineligible licences by March. He had said that since the alleged violation involved matters relating to Company Law, the matter would be examined by the ministry of corporate affairs before government action.

The DoT' pursuit of these 85 licences appears interesting in the context of its clarificatory petition last week on the 122 licences cancelled by the SC, which said it can conduct auctions only in 400 days, not four months. It also brought to the court's notice that should the 122 licences be cancelled, the service disruption could inconvenience around 70 million users. However, this number includes Uninor (40 million) and Idea (13 million) and Sistema Shyam (15 million) who have not been found ineligible by the CAG.