Total losses from 2G auction were Rs 1,76,379 crore: CAG

In its final report on the 2G spectrum allocation controversy, the Comptroller and Auditor General has found the manner in which the whole auction of the airwaves was done was arbitrary, didn’t follow its own guidelines and gave unfair advantage to certain companies.

The 45-page report which clearly indicts Communications Minister A Raja, under whose leadership the auction was carried, was submitted to the government yesterday. No decision has been taken when it would be tabled in Parliament.

The report estimates total losses to the exchequer to be Rs 1,76,379 crore — based on the revenue generated through the 3G auctions. “The total difference in the value (between what the government received and what it should have received) is worked out to Rs 1,39,652 crore (excluding the extra spectrum allocated beyond 6.2 MHz),” it says.

Earlier, in January 2008, the Department of Telecommunications (DoT) had sold licences to nine firms on a first-come first-served basis at Rs 1,658 crore each for the pan-Indian licence — these prices were fixed in 2001 when the number of subscribers were much less.The government generated a total revenue of Rs 8,987 crore through these licences.

Later, these companies had gone ahead and sold their licences at a much higher rate, thereby proving that the original price was highly undermined.

Swan Telecom, one of the licensees, sold 45 per cent of its shares to Etisalat of the United Arab Emirates for Rs 4,100 crore, which was seven times higher than the price at which Swan had bought it from the government. Unitech Wireless offloaded 60 per cent of its stake to Telenor of Norway for Rs 6,200 crore. Again the price was seven times higher than the purchase price. Tata Teleservices sold 26 per cent of its shares to NTT DoCoMo of Japan for Rs 12,230 crore, while the Chennai-based STel group allegedly sold 49 per cent of its shares to Betel for nearly $225 million, and Shyam Teleservices sold 70 per cent to the Russian firm Sistema.The first two companies mentioned have no experience in the telecom sector. In addition, they have no assets worth their name other than a licence that came bundled with the spectrum.

In 2008, the finance ministry had calculated the exchequer had incurred a loss of Rs 31,453 crore due to the faulty auction process followed by DoT.

The report criticises the department for ignoring the advice of the law ministry which had ruled that going by the importance of the case the matter should have been referred to an Empowered Group of Ministers, or EGoM.