What is
the 2G spectrum scam about?
Monday November 15, 2010 12:01:35 PM,
IANS
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Raja
resigns over spectrum row, DMK relents
After adamantly refusing to resign,
beleagured Communications and IT Minister A. Raja quit the cabinet
late Sunday over the 2G spectrum controversy, ending an
opposition-Congress standoff that
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New Delhi:
Here is a background on the 2G spectrum controversy that resulted
in Communications and IT Minister A. Raja of DMK resigning Sunday:
The issue dates to 2008 when nine telecom companies were issued
scarce airwaves and licences for second generation (2G) mobile
phone services at Rs.1,658 crore (less that $350 million) for a
pan-India operation. As many as 122 circle-wise licences were
issued.
The opposition said that by giving the airwaves cheap, that too in
the controversial manner of first-cum-first-served basis, the
exchequer had lost billions of dollars. The cut-off date for
applications was also arbitrarily advanced.
Later, based on the auction of airwaves for third generation (3G)
services, which got nearly $15 billion to the exchequer, and that
for broadband access, which fetched over $8.5 billion, the
notional loss was estimated at $38 billion to the exchequer.
But Prime Minister Manmohan Singh himself defended Raja's decision
and said May 24 that all that his communications minister had done
was to implement a policy already in place and none of the norms
were flouted.
The opposition further stepped up its attack with two examples on
2G auction:
- A new player, Swan Telecom, bought licences for 13 circles with
the necessary spectrum for $340 million but managed to sell a
45-percent stake in the company to UAE's Etisalat for $900
million. This swelled its valuation to $2 billion without a single
subscriber.
- Another new player, Unitech, paid $365 million as licence fee
but sold a 60-percent stake to Norway's Talenor for $1.36 billion,
taking its valuation to nearly $2 billion, again without a single
subscriber.
Similarly, another licensor, Datacom, later became Videocon Mobile
and Stel now has large stake by Baharian Telecom. The other
companies are Tata Tele, Idea Cellular, Loop Telecom, Shyam
Telelink and Spice.
As recently as last month, the Supreme Court asked the solicitor
general why the prime minister had not responded to the
representation by the opposition to sanction proceedings against
Raja.
The final blow came after the Comptroller and Auditor General of
India said the entire process of spectrum allocation was
undertaken in an arbitrary manner and that the advise of the
industry watchdog was ignored and misused.
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