Proving charges tricky in India's spectrum scandal

Ruth David
27 Oct 2009

In India’s telecom industry it is no secret that a handful of favored companies acquired valuable spectrum at prices much lower than they would have been in an open market.

But as the federal Central Bureau of Investigation (CBI) embarks on a probe of possible irregularities between telecom officials and companies, there is skepticism on what it will be able to conclusively prove.

The CBI raided the offices of the Department of Telecom (DoT) on Friday as well as the offices of ten telcos. The agency is probing the sale of 2G spectrum to January 2008 for the same price at which it was sold in 2001.

“These charges are not easy to prove. The events under the lens are from roughly two years ago” says Mahesh Uppal, director of telecom consultancy Com First (India). “The compulsions of coalition politics are the main reason why not much has been done about this. In India the chances of any serious action against errant politicians/bureaucrats are generally low.”

Minister for Communications and Information Technology, A Raja, presided over the 2008 sale, which drew criticism because companies like Unitech that didn’t have a core telecom business picked up licenses for very low prices and then sold them off to foreign operators at high profits.

Raja has absolved himself of any wrongdoing, in the face of opposition calls for his resignation. The minister is part of the ruling Congress coalition and after the CBI raided the offices of the Department of Telecom Thursday, he told media: “All decisions on spectrum licensing have been taken in accordance with procedures and in consultation with the prime minister.”

On Sunday, Prime Minister Manmohan Singh, who is in Hua Hin, Thailand for a conference, refused to publicly support Raja or answer questions on whether the minister should resign.

But even if the controversy results in Raja’s resignation, it’s unlikely to have an immediate impact. “I don’t expect a major change in the scenario that will impact immediate decisions,” says Uppal.

The next big event for the industry is the auction of 3G spectrum, which is going to be held on January 14, the Department of Telecom announced over the weekend. It was earlier scheduled for December 7.

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