New operators shocked by SC verdict; may file review petition

Jolted by the Supreme Court's judgement that cancelled 122 telecom licences issued in 2008, the new operators on Thursday expressed shock over the verdict and indicated that they may file review petition.

The affected companies whose licences are cancelled include Uninor (joint venture between Unitech and Telenor of Norway), Sistema-Shyam (joint venture between Shyam Telecom and Sistema of Russia), Videocon, Loop Telecom, Idea Cellular, Etisalat DB (joint venture between DB Realty and Etisalat of UAE) among others.

Sistema-Shyam, which offers mobile services under the MTS brand and Unitech-Telenor joint venture that provides services under brand Uninor have made huge investments for rolling out the services across the nation.

The companies have said that they have been unfairly treated claiming that they simply followed the government process for acquiring licences.

"Sistema-Shyam is still awaiting the full text of the judgement... The company would like to state that being a law abiding organisation, it reserves the right to protect its interests by using all available judicial remedies," SSTL said in a statement.
Uninor expressed shock on the verdict and said, "We have been penalised for faults the court has found in the government process."

The new licences bundled with 2G spectrum were issued by former telecom minister A Raja in January 2008 for Rs 1,651 crore for a pan-India licence. On this, the government auditor CAG had assumed a presumptive loss of revenue of up to Rs 1.76 lakh crore to the exchequer.

According to estimates, cancellation of these licences may free about 500 Mhz of 2G spectrum which may be auctioned by the government.

Leading service provider Idea Cellular said the company was unnecessarily caught in this situation of cancelled licences just because they were granted in January, 2008, which was as late as 18 months from the date of application.

"It is unfortunate that a senior incumbent operator like Idea Cellular is being made to suffer due to this cancellation of licenses, despite being fully compliant at each stage of the license allocation process," Idea Cellular said in its strongly worded reaction.

Norway-based Telenor, majority stake holder in Uninor, said, "We look to the government to arrive at a fair outcome that doesn't jeopardise our lawful investments."

Sistema-Shyam claims to have invested over USD 2.5 billion (about Rs 12,500 crore) so far for acquiring licences and rolling out services.

Telenor claims to have already invested over Rs 6,100 crore in equity and over Rs 8,000 crore in corporate guarantees as a foreign investor that trusts a licence stamped by the government of India.

The GSM operators lobby group COAI said, "It respects the Supreme Court decision. At the same time, it is imperative that the government is sensitive to the huge investments that have gone into the sector... We are hopeful that a balanced approach will be adopted by the Government keeping in view the interest of all the stakeholders.

Reacting to the Supreme Court verdict, UAE-based Etisalat said, "The company will work closely with Etisalat DB's management and legal counsel to understand the judgement, its ramifications on the operations of the company, particularly its customers and employees as well as its right to a review of the Supreme Court decision."

Meanwhile, Aircel and Vodafone said that their license have not fall under the list.
"DB Realty is in the business of real estate development and has no direct or indirect shareholding in Etisalat DB," DB Realty said in a statement.

STel said that after the Supreme Court verdict, "we feel like a victim caught in a riot".

Loop Telecom said in a statement that on March 9, 2011 it had submitted to the Supreme Court that it was not interested in profiteering from mispriced allocation of spectrum and had offered to the Court that the licenses issued be taken back and re-auctioned so as to establish a fair market price for the spectrum.

"Loop’s applications for new licenses were made in pursuance to the policy announced by the Government in August 2007 and with the intent of expanding its presence from a single circle to a pan India operation. Loop Telecom did not sell any of its shareholding after having received such license," the statement said.