The Economic Times: Telecom cartel killed spectrum auctions; govt failed to act: CAG

[alok agarwal]

 

 

NEW DELHI: The national auditor has alleged that telcos acted as a cartel in the recently concluded spectrum auctions and accused the government of wittingly or unwittingly aiding and abetting mobile phone companies by not acting against them.

This is the second instance the Comptroller and Auditor General (CAG) has raised the red flag over the government's spectrum policy, the first being in 2010, when it indicted the UPA government and former communications minister A Raja for causing a loss of up to 177,000 crore by selling airwaves at a fraction of their original value.

CAG, in an April 9 communication to the telecom department, said cartelisation by telcos in the last two auctions had resulted in spectrum valued at thousands of crores being wasted. It also contended the failed auctions had led to the government losing out on funds. The national auditor's intervention may create fresh controversy for the beleaguered UPA government as well as the troubled telecom sector.

The absence of all major operators in both rounds of the auctions had led to speculation they had collectively decided to not participate, but this is the first time that an official body has directly accused them of cartelisation.

The spectrum sales were held after the Supreme Court last year quashed all mobile permits issued by Raja in 2008 and directed the government to issue new licences through auction.

The first round of sales in November 2012 evoked a tepid response with the Centre garnering just 9,407 crore from 2G spectrum bids, less than a quarter of what it expected. Close to 60% of the airwaves remained unsold. In addition, the government was forced to cancel the sale of CDMA airwaves, as there were no bidders for these frequencies.

Despite reducing the base price, the government's attempt to sell the unsold GSM spectrum in the second round in March ended in a failure after all companies pulled out of the sale process. Sistema Shyam, the sole bidder in the sale process, bought 40% of the CDMA airwaves on offer at the base price.

According to an internal note of the telecom department, CAG has based its charges on the fact that mobile phone companies had been demanding additional spectrum for years and had repeatedly said supplementary airwaves were necessary to meet Trai-prescribed service quality standards.

http://economictimes.indiatimes.com/news/news-by-industry/telecom/telecom-cartel-killed-spectrum-auctions-govt-failed-to-act-against-them-cag/articleshow/20160760.cms