HindustanTimes Mon,22 Dec 2014

Telcos formed cartel in 2G spectrum sale: CAG

Manoj Gairola , Hindustan Times  New Delhi, May 20, 2013
First Published: 23:11 IST(20/5/2013) | Last Updated: 02:36 IST(21/5/2013)

A unit of the Comptroller and Auditor General (CAG) of India has slammed the recent spectrum auctions, saying private companies acted as a cartel while the government was lax in implementing and supervising the process in the wake of the 2G spectrum scandal.


Both the government and the telecom service providers have come under direct firing line of the director-general (audit), post and telecommunications, a unit of CAG according to an internal note of the Department of Telecommunications (DoT) accessed by Hindustan Times.

The failed auction cost the cash-starved government dearly as it could have raised tens of thousands of crores from a successful sale of spectrum, the audit said.

The government has held two rounds of auction in last seven months. In November 2012, the government could raise only Rs. 9,407 crore against the anticipated Rs. 45,000 crore if the companies had bought all the spectrum at the reserve price set.

In March auction, the companies did not participate for spectrum. Only MTS bought CDMA spectrum for Rs. 3,700 crore for eight circles.

“As per DG (Audit), apparent cartelisation by the telecom service providers observed recently in the last two spectrum auctions, wittingly or unwittingly aided and abated by the inaction/delayed action of the licensor (government) ……have already cost the government very dearly in the recent 2G auctions as huge tranches of spectrum valued at tens of thousands of crores, available in the country for cellular mobile services, are being rendered waste while the government is starved of its due resources when it needs most,” said the DoT note.

MF Farooqui, secretary of DoT, declined to comment saying that he had not seen the note.

The Cellular Operators Association of India (COAI) has rejected the audit report. Rajan S Mathews, director general of COAI said it was only the high reserve price that caused the auction to fail.

“When the DoT instructed auctioneer to design auction, I am sure this was taken care of. If there is break down in the design of auction, then industry can not be blamed,” said Mathews.

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