Audit DG raps DoT on plan to bail out new telcos

Says those with excess spectrum may benefit at public expense.

The Director General of Audit (Post and Telecommunications) has lambasted the Department of Telecommunications (DoT) on the proposed bailout plan for new mobile operators. The objection is that the latter might be holding excess spectrum and allowing an exit route for them will mean hoarding of spectrum without any revenue share for the exchequer.

The DG of Audit is part of the office of the Comptroller and Auditor General of India. In its communication to DoT, the DGA said the department had granted new unified access service licences (UASL) to certain companies without proper verification of their eligibility and other credentials.

DoT had issued eight new 2G licences in 2008 to, among others, Uninor, Sistema Shyam, Etisalat DB, Stel and Loop Mobile. Some who have merged or are going to after completing the mandatory three year wait could be holding more spectrum than stipulated in the guidelines, it said.

The development came when DoT was contemplating permitting new operators to return 2G spectrum and return the Rs 1,650 crore they paid to the government for a pan-India licence. Currently, the licence conditions do not have any such provision but stipulate a three-year lock-in period for mergers and acquisitions.

The national interest should be accorded supreme priority from all angles, including the financial one, the communication stated. Adding, “Allowing operators to exit the sector after allotment of spectrum but before achieving the roll out obligations will mean that the players were hoarding valuable national resource (spectrum) without paying any revenue share to the national exchequer.”

At least three new operators had requested surrendering of 4.4 MHz start-up spectrum and return the Rs 1,650 crore of licence fee paid for a pan-India licence, as they were struggling to cope with low rates and increased competition.

Communication minister A Raja had said the government was working on a bailout package for the new operators and it would be discussed in the Telecom Commission, the highest policy making body of DoT.

The DG further said any decision on the proposed exit route for some telecom licensees and allotment of spectrum to be merged should be in consonance with the terms and conditions of the licence agreement and on the lines of the policy on mergers and acquisitions.