Saturday, Dec 20, 2014

CAG critical of R-Jio entry on easier terms than 3G players

By: ENS Economic Bureau | New Delhi | Posted: January 21, 2014 4:03 am

Just weeks ahead of the planned auction of airwaves, the government auditor is reported to have criticised the Department of Telecommunications (DoT) for allowing Reliance Jio Infocomm to enter the broadband wireless service on easier terms than its competitors in the 3G services.

The company is a subsidiary of Reliance Industries. After the auctions in 2010, Reliance Jio bought out Infotel Broadband Services Pvt Ltd (IBSPL) after the latter won spectrum in all the circles that was put up for auction at Rs 12,750 crore.
The comments of the Comptroller and Auditor General (CAG) are allegedly in a draft report sent to the DoT for comments. The auditor, which had issued a damning report earlier saying the government had lost out a notional Rs 1.76 lakh crore for not having auctioned the airwaves before 2010 has now found fault with the auctions too.

It has said the eligibility criteria set for bidders allowed Reliance Jio to buy out as there was no lock-in period for holding the spectrum post the auction unlike the 3G auctions. In reply to a PTI report, Reliance Jio has informed the agency that it was refuting the charges.

The audit report quoted by PTI says “Due to the provision of inadequate eligibility criterion for the participation in the auction of BWA spectrum and deficient due diligence on the part of DoT officials, the promoters of IBSPL… made windfall gain of Rs 4,800 crore at the cost of public exchequer immediately after closure of BWA spectrum auction in June 2010”.

According to the auditor, by obtaining the BWA spectrum by acquiring a winning company without participating in the auction within hours of closure of auction process, vitiated the sanctity of the auction process. (With PTI inputs)

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