TRAI statement takes steam out of 2G spectrum case | delhi | Hindustan Times
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TRAI statement takes steam out of 2G spectrum case

delhi Updated: Sep 01, 2011 23:39 IST

The CBI may face a major embarrassment in the 2G case as facts and opinions coming from various government departments and the telecom regulator weakens its case.

The Department of Telecommunications (DoT) and the Telecom Regulatory Authority of India (TRAI) have said there was no loss to the government in awarding 2G spectrum to new operators on the first-come-first-served basis (FCFS).

This has taken the steam out of the most high-profile corruption case in the Indian history — valued at Rs 176,000 crore by the Comptroller and Auditor General (CAG) of India— in which former cabinet minister A Raja, former secretary S Behura and promoters and executives of top companies, and politicians are behind bars.

"The TRAI repeatedly held the view that telecom services and spectrum should not be treated as a source of revenue for the government," an August 20 TRAI report to the CBI said.

"It is against this background that TRAI did not recommend auction methodology, nor did it recommend any increase in the entry fee for new operators."

The body has also said that the Raja followed the FCFS basis. The other issue, of associate companies, too has gone against the CBI. Under the law ministry's definition, Swan Telecom and Loop Telecom are not associates of Anil Ambani promoted Reliance Communications (RCOM) and Ruia's promoted Essar group respectively.

"For company B to be treated as an associate of company A for the purpose of clause 8, there must either be a holding and subsidiary relationship between the two companies, or there must be a more than 50% shareholding in both companies by common parent holding shares in either of the two companies," an August 30 law ministry opinion to DoT said.

This is in tune with an earlier opinion of Ministry of Corporate Affairs. As a result, CBI's case against the three RCOM executives and two promoters — Vinod Goenka and Shahid Balwa — of Swan gets weakened.

The law ministry has also clarified that the licence condition that a company cannot have more than 10% equity in another company is applicable only "when the applicant signs the licence agreement with the government and not before that date".