Allow resale of spectrum: Committee on natural resources

While selling a 60 per cent stake in Sanjay Chandra-controlled Unitech Wireless in 2008 after the company acquired 2G spectrum is at the root of an inquiry into the 2G scam, the high-level committee to recommend a policy on distribution of scarce natural resources is not likely to recommend any bar on the resale of spectrum.

The committee, chaired by former Union finance secretary Ashok Chawla and comprising key government secretaries and people from chambers of business, feels holders of spectrum should be allowed to trade once they have acquired the bandwidth through auctioning.

The panel, which is to give its report to the group of ministers on addressing corruption, has firmed up the opinion as part of its suggestions on spectrum sale, even as the Telecom Regulatory Authority of India (Trai) has opposed the recommendation, a senior official told Business Standard.

The government could put conditions to the transfer but should not bar it, said the official.

Experts say though the suggestion is controversial there could be two views on the issue. “From a public policy point of view, it is not desirable to have private enterprise benefit from sale of public property but from a commercial point of it is important to allow subsequent sale. In order to have a robust and viable financial system around the resource, you need to have assets that can be transferred subject to payment of a fee. There is no point in having a gridlock in the system,” said Suhail Nathani, partner, Economic Laws Practice.

Norway’s Telenor decided to buy a 67 per cent stake in Unitech Wireless, now known as Uninor, for Rs 6,120 crore though the company had not even launched any services at that time. Unitech had bought telecom licences bundled with second-generation spectrum from the government for around Rs 1,651 crore.

Stating that creating a gridlock would defeat the purpose of launching public service, Nathani said the government purpose was not to make money but to see that public gets a service. So, instead of recalling it and bidding it out again, it can allow transfer through payment of fee. “This is also important in order to see that the roll out is according to the schedule,” he said.

The committee is also likely to recommend that a proper assessment of spectrum and bandwidth and a schedule of bidding should be worked out before auctioning begins. “If the industry does not have an idea of how much is available, there would be distortion in the auctioning system,” said the official.

The committee has also favoured making the wireless planning and coordination wing independent of the telecommunication ministry to remove any discretion and influence by the government functionaries.The other option was to merge it with the existing telecom regulator, said the official.

In the committee’s view auctioning of 3G and BWA, that fetched the government over Rs 1 lakh crore last year, had worked well. There was no need for changes in the bidding procedures though there was a need to use discovered price as a legacy in the bidding process is maintained.