India revokes 122 2G licenses

Michael Carroll and Dylan Bushell-Embling
03 Feb 2012


India's Supreme Court has revoked all 122 of the 2G licenses awarded in 2008.


Assuming there is no challenge to the court decision, the licenses held by S Tel, Videocon, Uninor, Swan Telecom, Loop, Idea, Tata Teleservices and Etisalat DB will be binned at the start of June.


The court found that the licenses, handed out during the controversial spectrum allocation overseen by disgraced former telecom minister Andimuthu Raja, unfairly benefited the operators by means of Arbitrage, Bloomberg UTV said


Norway-based Telenor's local subsidiary, Uninor, stands to lose 22 licenses as a result of the Supreme Court decision. The operator stated that it is too early to comment on the impact as it hasn’t had time to fully review the ruling.


The firm hints it is hopeful that India’s government will intervene and order the Telecom Regulatory Authority of India (TRAI) to reallocate the licenses.


The court decision follows a scandal surrounding the allocation of the licenses by Raja. At its simplest level, Raja is accused of applying 2001 prices to the later sale, a move that India’s Comptroller and Auditor General reckons resulted in 70% of winning applicants being unqualified to participate in the auction, and cost the government up to $39 billion in lost revenue.


In addition to scrapping the licenses, the Supreme Court is ordering operators to pay a penalty of 50 million rupees ($1.02 billion), Bloomberg reports. Analysts told the Wall Street Journal the decision will hit foreign firms harder than domestic companies, which is likely to impact future investment in India.


Michael Carroll and Dylan Bushell-Embling

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