EGoM allowed adjustments for Telenor, says DoT

The Empowered Group of Ministers (EGoM) on telecom adjusted the charges for the spectrum that Telenor's Indian entity Telewings Communications had won in the November 2012 auction - for which the entry fee was paid by its former Indian partner Unitech Group in 2008 - because the ultimate beneficial owner of both the entities was Telenor Norway, according to the Department of Telecommunications (DoT).

DoT's observation was in response to the questions raised by Director General of Audit, Post and Telecommunications, recently claiming that the set off in favour of Telewings was "irregular, arbitrary and discriminatory".

"Neither was any consultation done with the Telecom Regulatory Authority of India (Trai), nor was the approval of Telecom Commission sought before taking the decision," the audit report noted.

In its reply, DoT stated that the EGoM, keeping in view the facts and details of ownership structure, decided that in principle of equal restitution earlier approved would apply in this case also, given the ownership details as the ultimate beneficial owner of both the entities is Telenor Norway.

DoT said that the set-off allowed was not in the nature of refund as it was allowed only to the companies that participated and were successful in the auction.

It has also pointed out that these firms were pressing for compensation under bilateral investment agreements.

Telenor holds 49 per cent in Telewings and has sought approval of the Foreign Investment Promotion Board (FIPB) for raising its stake to 74 per cent. In the earlier joint venture with Unitech group, Telenor had 67.25 per cent stake holding in Unitech wireless.

Uninor, the erstwhile joint venture between Telenor and India's Unitech, had paid Rs 1,658 crore for its previous mobile permits that were revoked by the Supreme Court when it cancelled 122 controversial licences in February 2012.

Twenty-two among them were Uninor's.

In the November 2012 auction, Telenor won six licences through a subsidiary, Telewings Communications.

Telewings was required to pay Rs 4,018 crore in instalments. "They made 33 per cent upfront payment of Rs 1,326 crore and made a representation, requesting DoT to set off the entry fee of Rs 1,658 crore paid by the eight companies of Uninor," the audit report had noted.

The audit report also stated a similar request was made by Idea Cellular as well. It had asked for a set-off of fee against that paid by Spice Communications, which it had acquired earlier, and whose licences were quashed as well. This request was, however, disallowed.

In response to the Idea-Spice issue, DoT noted that the case is different from the Telenor case. Spice was a quashed licence holder, which was acquired by Idea Cellular.

Although Idea has represented to consider the entry fee paid by Spice against its quashed licences towards set off, the government has not allowed any set off till now. The matter is under consideration, DoT noted in the communication.