2G: Operators defensive as TRAI moots cancelling 62 licences

The Telecom Regulatory Authority of India (TRAI) proposed cancelling as many as 62 licenses held by five telecom operators, including the joint ventures with Indian companies of Telenor ASA, Emirates Telecommunications Corp and Sistema JSFC, as a new crisis looms in a sector that has seen its minister A Raja resign early this week over allegations he mishandled the allocation of spectrum to new players in January 2008 (See: Sibal takes stock as TRAI seeks cancellation of over half of 2G spectrum licences).

 India's telecom sector – the second-largest and fastest-growing in the world – has been dogged by allegations of favouritism and manipulation after the Comptroller and Auditor General, in its report tabled in Parliament on Tuesday, condemned the ministry's allocation of mobile telephone spectrum, saying it cost the government over Rs1.76 lakh crore ($38.9 billion) in lost revenue.

The report by the CAG dealt mainly with the Department of Telecom's January 2008 allotment of licenses and bandwidth to 13 companies as radio waves were handed out at rates fixed in 2001, despite India's economic growth in the intervening period.

The 62 licenses proposed to be cancelled by TRAI belong to the group who were issued licenses in January 2008. "We have reviewed about 127 licenses and have recommended that some licenses may be cancelled on the ground that either they have not rolled out (mobile phone) services or for improper roll out of services, so that the spectrum can be utilised," a senior official at TRAI said.

It has been proposed that licenses be cancelled for the non-roll out of services for Loop Telecom Pvt Ltd in 14 service areas; Etisalat DB Telecom Pvt Ltd in two service areas; Sistema Shyam Teleservices Ltd in 10 service areas and Unitech Wireless Ltd in eight areas, he said.

The regulator also proposed that 13 licenses of Etisalat DB Telecom; five of Loop Telecom, and 10 of Videocon Telecommunications be cancelled as their roll outs of mobile phone services weren't satisfactory, he added. The DoT, the country's telecom licensing authority, will now make a final decision on the recommendations, he said.