|Friday, 03 February 2012 17:41|
SC ensures Sibal’s zero loss to exchequer
A little over four years after then telecom minister A Raja gave away 156 licences at bargain basement prices, Supreme Court gave closure to the most important part of the case. Though the criminal proceedings are at their first stage—after the lower court, the case will find its way to the high court and ultimately the Supreme Court in a proceeding that could well take up to two decades—Justices GS Singhvi and AK Ganguly ordered cancelling of 122 licences issued by Raja in January 2008. A petition to cancel 34 ‘dual technology’ licences is pending in the Supreme Court, an appeal against the TDSAT’s judgment that said this was legal. Theoretically, the government is now free to auction the licences though, given the depressed state of the telecom as well as financial markets, it’s unlikely it will get anywhere near the R1,02,000 crore estimated by CAG as the loss due to these 122 licences—the rest was on account of the ‘dual technology’ licences and the ‘extra’ spectrum the older telcos like BSNL, MTNL, Bharti and Vodafone held. As of today, the supply of spectrum, more so if 4G spectrum is to be auctioned, outstrips demand, so the only way to get a fair value may be to put a floor price for bids.
While dialling closure, the Supreme Court has argued that Raja did not consult with other ministries as was required under the law—it points to the finance and law ministries’ objections that Raja brushed aside. Though the Court has cited a section of the Trai’s recommendation which said spectrum pricing needed to be revisited, it comes down harshly on Trai and says the approach adopted by it was ‘lopsided’ and contradicted the Cabinet decision of 2003 which said pricing for new licensees would be determined in consultation with the finance ministry—since the Trai chief was a former telecom secretary, he should have known about it.
As a result of Thursday’s judgment, some of the disputes like between Unitech and its partner Telenor have also become irrelevant as their licences have now been cancelled. A final picture, however, is still not clear as the Court has not made any recommendation on whether the Raja licensees are to be compensated. The ball is now in Trai’s court which will have a formal consultation on whether the licensees are to be compensated and, if so, to what extent—the fact that most of the licensees never rolled out their networks and so have to pay huge fines on this will also have to be taken into account. Nor is there any clarity on what happens to banks who have extended around R25,000 crore of loans to the new telcos. While the older players will cheer yesterday’s Court judgment, the process of undoing Raja’s largesse has only begun. The judgment also has important ramifications for how other natural resources are to be handed out—the Court has said the process has to be transparent and fair. Though the judgment is without prejudice to the existing criminal trial, it seems unlikely CBI lawyers will not use it to further their argument.