Companies & Sectors
Additional spectrum allotted during Mahajan's tenure without coordination

A letter sent by George Fernandes was purportedly received by Mahajan's office after 15 days and by that time additional spectrum had already been allocated to Bharti Cellular and Sterling Cellular (now Vodafone) in Delhi and Hutch in Mumbai

 
New Delhi: Additional spectrum beyond 6.2 Mhz was allotted during the late Indian Telecom Minister Pramod Mahajan's tenure to cellular operators Airtel, Vodafone and Idea without due coordination with Defence agencies, the Central Bureau of Investigation (CBI) has claimed in a probe, reports PTI.
 
In its report to the Law Ministry, CBI also claimed that Mahajan, who was the Telecom Minister during the Bharatiya Janata Party-led National Democratic Alliance rule, had apparently told "half truth" to Defence Minister George Fernandes that additional spectrum upto 8 Mhz to cellular operators was assigned only after due coordination with Joint Communication and Electronic Staff (JCES).
 
The report which was sent to Law Ministry seeking opinion of the Attorney General whether a criminal case was made out against the accused companies, mentions exchange of communication between the then Ministers Mahajan and Fernandes over the issue of grant of additional spectrum and coordination with Defence Services.
 
In a letter to Mahajan on 4 July 2002, Fernandes had flagged the issue of co-ordination of frequency spectrum with the Defence Services, CBI sources said Thursday.
 
They said the letter was purportedly received by Mahajan's office after 15 days and by that time additional spectrum had already been allocated to Bharti Cellular and Sterling Cellular (now Vodafone) in Delhi and Hutch in Mumbai.
 
CBI sources said Fernandes had written that Telecom Ministry had gone ahead by receiving spectrum fees/charges from the new cellular operators without proper coordination on a case-to-case and place to place at many locations.
 
Mahajan in his reply to Fernandes said frequencies had been assigned only after coordination with the defence services.
 
"The facts, however, show that it was half truth. The DoT actually wrote to JCES that it was going to allocate spectrum on trial basis in a few days and if no response was received from JCES that spectrum would be allocated to respective companies," CBI claimed in its report.
 
CBI claimed that investigation had revealed that the additional spectrum beyond 6.2 Mhz was allotted to the companies even without due coordination by the JCES. 
 
CBI had sent the report to Law Ministry seeking advice of the Attorney General in the case of alleged irregularities in awarding extra spectrum to Airtel and Vodafone after difference in opinion over whether a case against the telecom giants was made out or not.
 
A group of officials believed a case against the two telecom companies was made out as they were only beneficiaries of the laid down policy while another team of officials involved in decision-making had a different view, official sources said.
 
The matter, therefore, was referred to the Attorney General for his opinion who is yet to give any opinion, the sources said, adding CBI would file a charge sheet in the case only after getting the opinion of the top law officer of the government.
 
The agency, in its FIR, had alleged the two companies had entered into a criminal conspiracy which resulted in a loss of over Rs 500 crore to the state exchequer.
 
In its report, CBI alleged that the then Wireless Advisor PK Garg opined on the file that trials would commence under intimation to the Defence Ministry and if no comments were received from them within a month, formal assignment of spectrum would be issued to operators.
 
The opinion of Garg had the concurrence of the then Member (technical) Vinod Vaish, Secretary and also the approval of Mahajan, the agency said.
 

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Cabinet clears Rs31,000 crore spectrum levy on mobile operators

While the price discovered in the auction beginning 12th November will apply for the one-time fee to be charged from incumbent GSM operators, the DoT will work out the basis for the same for CDMA carriers

 
New Delhi: The Cabinet on Thursday approved levy of about Rs31,000 crore as one-time fee on spectrum held by incumbent telecom operators such as Bharti Airtel and Vodafone in an attempt to create level playing field between old and new operators, reports PTI.
 
Finance Minister P Chidambaram said the Cabinet has approved the recommendation of an Empowered Group of Ministers (EGoM) that GSM-based telecom operators be asked to pay for airwaves they hold beyond 4.4 Mega-Hertz at an auction-determined price, while CDMA carriers pay for holdings beyond 2.5 MHz, for the remaining validity of their permits.
 
GSM-operators holding more than 6.2 MHz of spectrum will pay a retroactive fee for the airwaves from July 2008.
 
Chidambaram said while the price discovered in the auction beginning 12th November will apply for the one-time fee to be charged from incumbent GSM operators, the Department of Telecom (DoT) will work out the basis for the same for CDMA carriers.
 
This is because there is no bidder for CDMA auction now and so there will be no auction determined price, he said.
 
"Similar recommendations (of auction determined price being levied) were made for CDMA but there has been subsequent developments since the EGoM meeting that bidders who had evinced interest for CDMA auction have withdrawn from the auction. Therefore there is no auction now for the CDMA," he said.
 
"DoT has been requested to come back to the Cabinet regarding implementation of the decision regarding CDMA," he added. .
 
The government had planned to hold two separate auctions for spectrum used by GSM and CDMA-based mobile phone carriers hoping to reap a combined Rs40,000 crore revenue.
 
It has set a base price of Rs14,000 crore for 5 MHz of a pan-India GSM spectrum, more than seven times what companies paid in 2008 to get telecom licenses. For CDMA, the base price was set at 1.3 times the GSM airwaves.
 
However, no bidder is left in fray for CDMA auction after Tata Teleservices and Videocon Telecommunications withdrew from the sale.
 
Chidambaram said licensees "will be given an option to surrender spectrum beyond 4.4 MHz for GSM" if they don't want the one-time fee.
 
Also, payments can be made in equated annual instalments at 9.75% interest rate.
 
"The licensees will be allowed equated annual instalments for the balance number of years of license (such that the last instalment is payable not later than 12 calendar months prior to expiry of the license)," official statement said.

The Cabinet has also allowed sharing of spectrum, or radiowaves, among telecom operators who have paid for it beyond 4.4 MHz (GSM) as per the decision will be allowed.

"If two service providers are there and both have paid for spectrum 4.4 Mhz, then no charge. But both TSPs will have to pay spectrum usage charge at the slab rate applicable on entire combined spectrum holding," Telecom Minister Kapil Sibal said.

The Cabinet also decided on intra-service area merger. A company acquiring an operator, which was given spectrum at old rate of Rs1,658 crore, will have to pay for radiowaves that the target company holds as per the price determined through auction starting 12th November 12.

"If company which has got 4.4 (Mhz spectrum), not beyond 4.4 (Mhz spectrum), is going to be acquired and they got the licence based on entry fee, then in that case resultant merged entity will be required to pay to the government differential between entry fee and current auction determined price," Sibal said.

On the issue of allotment of initial spectrum to firms that have paid the requisite fee but have not been allotted spectrum so far, the Cabinet decided that the claim of such company for allotment of 4.4 MHz of spectrum will be considered after the completion of auction process, subject to availability of spectrum.

"This is only related to one case, Tata's. So after this (auction) process is completed the issue will be considered," Sibal said.

The decisions are expected to result in more efficient utilisation of the scarce natural resource, facilitating proliferation of telecom services in the country, he added.

On the issue of levying one-time spectrum fee, Sibal said, "On CDMA issue, we will come back to the Cabinet because there is auction discovered price now, but that does not mean that (they) will get away without paying the price."

He said the government will determine the basis on which that price is to be paid in the interim, before the auction takes place. The discovered price will then be paid and it will be adjusted in the auction determined price.
 
 

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Debt-ridden Kingfisher Airlines' Q2 loss widens to Rs754 crore

Kingfisher's revenues in September quarter tumbled to Rs200 crore from Rs1,553 crore in the same period last year due to disruption in operations and eventual suspension of its licence by aviation regulator DGCA

Mumbai: Debt-ridden Kingfisher Airlines on Thursday reported a net loss of Rs754 crore for the July-September quarter, a sharp increase from Rs469 crore in the year-ago period, reports PTI.

 

The Vijay Mallya-owned carrier said it is working on a plan to resume its services.

 

Kingfisher's total revenue plunged to Rs200 crore during its second quarter from Rs1,553 crore in the same period last year due to disruption in operations and eventual suspension of its licence by aviation regulator the Directorate General of Civil Aviation (DGCA).

 

Even as the company's expenses declined across various heads, the firm suffered huge restructuring cost. Its tax expenses also rose sharply.

 

Announcing the result, the carrier said it is in discussions with various stakeholders to ensure that there are no future disruptions and expects to resume operations in the near future.

 

"Kingfisher Airlines is preparing a comprehensive plan for re-start of operations which will be shared with the DGCA and bankers," the carrier said in a BSE filing.

 

The carrier is already saddled with accumulated loss of Rs8,000 crore besides a debt burden of over Rs7,524 crore, a large part of which has not been serviced.

 

The DGCA had recently suspended the flying licence of Kingfisher following the airline's failure to come up with a viable plan of financial and operational revival.

 

It faces the risk of losing its licence if a revival plan is not submitted by next month, while bankers are working on plans to handle large scale defaults by the airline.

 

At 12.16pm, Kingfisher shares were trading at Rs12.81, down 0.16% on the BSE, while the benchmark Sensex was also marginally down at 18,813.

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