TRAI to cancel licences of five companies

Licencees did not comply with 2G roll-out obligations

The five companies facing cancellation of their licences are Uninor (Unitech group), Etisalat (earlier Swan), Sistema-Shyam, Videocon and Loop. The TRAI move comes close on the heels of the Comptroller and Auditor General (CAG) pointing out several lacunae in the 2G spectrum allocation as many companies had failed to roll-out their services on schedule.

Meeting

As soon as the TRAI recommendation came, Kapil Sibal, who recently took over the charge of telecom ministry after the exit of A Raja, summoned a meeting and asked his officials to act quickly on the regulator’s advice.

Telecom Secretary R Chandrasekhar and other senior officials, particularly those dealing with policy and licensing, were believed to have attended the meeting.
Sources in the DoT told Deccan Herald that the department will shortly issue notices to the errant companies.

After getting their replies, the DoT will initiate further action. “Cancellation notices mean the licences will not be scrapped over night, but the DoT will give sufficient time to companies to give reply,” sources in the DoT said. 

As per the licence agreement, the licencees were required to roll-out the services in 90 per cent service area in metros and 10 per cent district headquarters in other service areas within 12 months of the date of award of licences.

The CAG report had said the DoT failed to recover Rs 679 crore as penalty or liquidated damages from these new operators for not launching telecom services as per schedule.
The TRAI, which had recommended penalty for non-compliance with the roll-out obligations, said this amount could run into several thousands of crores.

“So, we had suggested that these licences should be cancelled. This would vacate enormous amount of spectrum and this can be given to companies that are serious about meeting the schedule,” the watchdog said.

The TRAI in its recommendation on Thursday said licences be cancelled in at least 15 circles given to Etisalat, a company earlier known as Swan that CAG had dubbed as a front company of Anil Ambani group, and 10 circles given to Sistema-Shyam. The TRAI also recommended that Unitech group’s Uninor be deprived of licences in 8 circles, Videocon in 10 circles and Loop in 19 circles.

The CAG, while unearthing huge anomalies in allotting 2G spectrum in 2008 also found that the DoT, under the stewardship of former minister A Raja, had allotted 85 licences out of 122 to ineligible companies in a fraudulent manner.

Though, DoT had told the CAG that it was mulling to issue notices to these companies, till date no such notices were issued to any of the companies. Now, the pressure is likely to mount on the DoT act against the tainted companies.