Cleaning up: Sibal puts dodgy licencees on notice

After bringing down telecom minister A Raja, the Rs 176,000 crore 2G scam is now dragging companies into the net. The government will send showcause notices to the firms that hold 85 licences issued in January 2008 for having got the licences despite not meeting eligibility criteria.

The notice asking why their licences should not be cancelled for suppressing facts will be sent within three to four days.

The government will also issue notices to companies holding 119 licences for not meeting roll-out obligations as specified in the licences. Of these, 81 firms are those that would be issued notices for not meeting eligibility conditions, telecom minister Kapil Sibal told reporters on Monday.

Operators will be given 60 days to respond, Sibal said, adding that each case will be dealt with separately. "After studying their response, a decision will be taken on whether these (licences) need to be cancelled or a penalty imposed."

The minister said that some companies might have suppressed facts while getting licences. All applicants must ensure their memorandums of association (MOA) — the constitution of the company that lists out the activities it will undertake — should have an object stating that the company can do business in telecom.

If a company has to alter its MOA, it is done in two steps. One, the board passes a resolution. Two, it is registered with the Registrar of Companies (ROC) and is effective from the date of registration in ROC.

Moreover, some companies didn't have the required authorised paid-up capital on the date of filing the application.

"This has an impact on first-come first-served," Sibal said.

"This is a legal issue. We believe the date when board passes resolution is the date when change in object takes place," said a promoter of a new licence holder.

"Mr Sibal's announcement does not address the issue of lost revenues," said Rajeev Chandrasekhar, MP and former head of BPL Communications.

Though Sibal didn't reveal names, the comptroller and auditor general had in its November 16 report identified Unitech Group, Datacom Solutions Pvt Ltd (owned by Videocon group), Swan Telecom Pvt Ltd (renamed Etisalat DB Telecom Pvt Ltd) and S Tel among others.