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Raja swears by fair play, blames cartel for ‘scam’

Raja said that spectrum and licences were allocated according to the Trai recommendations and that he'll resign if proven guilty.

Written by Corporatebureau |
November 8, 2008 11:23:13 am

Under fire for fathering a Rs 60,000-crore scam, communications & IT minister A Raja hit back on Friday with all the ammunitions in his store. At a hastily convened press conference, Raja said that spectrum and licences were allocated to new players according to the Telecom Regulatory Authority of India (Trai) recommendations and that he was willing to resign if proved otherwise. He said all his decisions conformed to the national telecom policy, 1999, Cabinet and Parliament approval.

In his offensive best, Raja blamed the “undeclared cartel”—an apparent reference to the existing telecom operators who were there before he took the ministry reins last year—for the controversy. The minister said he was being opposed because he sought to “transcend the telecom revolution to a new era” by promoting more competition so that tariffs come down further and tele-density spreads.

The controversy surrounding Raja is that he accorded licences and spectrum at cheap rates to a host of new applicants, of which two new licence-holders, Unitech and Swan, made a fortune by selling a part of their stakes. The two companies, which received spectrum for a measly amount of up to Rs 1,651 crore, recently sold some of their stakes at a valuation of around $2 billion without having any skeletal structure in place, subscribers or knowledge of the telecom business. In fact, Sanjay Chandra, head of Unitech Wireless, had even said that the company had no plans of investing any money in towers, which constitute the nuts and bolts of the telecom business. Raja’s critics maintain that the pan-India licence charge of Rs 1,651 crore was a price discovered way back in 2001, and that 2G spectrum should ideally have been auctioned to realize the current market-determined price.

Raja said that the 2G spectrum was not auctioned because Trai did not favour it and that there was nothing wrong in diluting equity by issuing fresh shares as opposed to sale of promoter’s equity. He said finance minister P Chidambaram had given him a clean chit on this count.

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In fact, the Telecom Commission, upon Raja’s insistence, would deliberate on a proposal on Tuesday to prohibit promoters from selling their equity for three or five years from the date of issue of a licence. Raja emphasised that promoting competition and ensuring availability of spectrum was his basic mandate, and that the government was not going to sell spectrum cheap to the telecom players and so his department was going to levy a higher spectrum usage charge. By raising the spectrum usage charge by up to 2% the government would get an additional revenue of Rs 5,000 crore a year.

On the offensive

Faces charges of under-selling spectrum & licences

Says these were issued according to Trai wishes

Decisions conformed to NTP, Cabinet & House approvals

Says he is willing to quit the position if proved otherwise

Hints that existing players were behind the controversy

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