The Comptroller Auditor General of India said by allowing Reliance Industries to offer voice telephony with a broadband licence, the Department of Telecom had caused a loss of Rs3,367.29 crore
India's official auditor has alleged that the broadband arm of Reliance Industries was given undue pecuniary favours worth over Rs3,000 crore by the government -- a charge which the company strongly refuted.
The Comptroller Auditor General of India said by allowing Reliance Industries to offer voice telephony with a broadband licence, the Department of Telecom had caused a loss of Rs3,367.29 crore.
"Reliance Jio Infocomm Limited (formerly, M/s Infotel) paid UL entry fee of Rs.15 crore and additional migration fee of Rs1,658 crore in August 2013. This migration, allowed at prices discovered in 2001, resulted in undue advantage of Rs3,367.29 crores to M/s Reliance Jio Infocomm," the CAG said in a report tabled in parliament.
"The decision to grant permission to an ISP (Internet) licensee with BWA (broadband) spectrum to operate in the voice telephony space also helped the ISP to circumvent the restrictions imposed by their licence at the time of auction, which were known to the ISP at the time of bidding for BWA spectrum," the audit report added.
It said the company -- which is now offering broadband under the Reliance Jio brand name -- was the first to take benefit of this scheme.
But the company faulted the audit assessment. "No favour has ever been given," a company spokesperson said.
"We have always conducted our business as per the prevailing laws and have abided by the rules and regulations prescribed by the Department of Telecom (DoT) and other regulatory authorities," the spokesperson said.
"We have acquired all our spectrum at market prices through open and transparent bidding processes, the conditions for which were same for all bidders. Further, the DoT rules for procuring the relevant licence for services using BWA spectrum too were the same for all successful bidders."
CAG said the auction rules "suffered from deficiencies like absence of financial parameters in the eligibility criteria for bidders, absence of lock-in-provision, disparity in scope of usage of BWA spectrum, lack of intermediate milestones in roll out targets etc."
While full fledged telecom operators were paying 3 to 5 percent depending on the quantum of spectrum held by them, BWA spectrum winners were asked to pay just 1 percent of its AGR as per the auction rule.
"This relaxation would result in significant loss of revenue to the government over 20 year licence period, since the BWA spectrum had potential to provide voice services also in addition to data services," CAG said.