Supreme court order on 2G: Uninor, Loop, MTS, Etisalat, S Tel, Videocon, Idea, TTSL to face music

The Supreme Court has cancelled the 122 2G
spectrum licences granted by former telecom minister A Raja.

This will have a major impact on the telecom investment
scenario in India. Mobile users are unlikely to affect since most of the new
licences holders have insignificant market share in the Indian telecom market.

Who will feel the heat?

Uninor, a joint venture between Unitech and
Telenor of Norway; Loop Telecom; Sistema Shyam a joint venture
between Shyam and Sistema of Russia; Etisalat DB; a joint venture between
Swan and Etisalat of UAE; S Tel, a part of Bahrain Telecom; Videocon; Tata
Teleservices, a company owned by DOCOMO of Japan and Tata group; and Idea
Cellular, a company owned by Birlas and the Axiata Malaysia.

The Supreme court cancelled the licences on the ground
that they were issued in a “totally arbitrary and unconstitutional”

The apex court has also imposed a fine of Rs five crore each on Etisalat, Unitech and Tata Teleservices companies, which offloaded their shares after getting the licenses. Loop, S-Tel, Systema Shyam and Allianz Infratech were fined Rs 50 lakh each.

The court directed the Telecom Regulatory Authority of India
(TRAI) to make fresh recommendations on allocation of 2G licences. A bench
comprising justices G S Singhvi and A K Ganguly said the allocation of spectrum
will be done through the policy of auction within four months.

The SC asked the government to take steps on the recommendations
of TRAI within a month.

The 122 licences were given by the telecom ministry under
the guidance of Raja for over Rs 9,000 crore, while 3G auctions fetched Rs
69,000 crore. There were major allegations that the telecom ministry
released 2G spectrum at this price due to influence of certain corporate in

Raja issued 122 licences in January 2008 on first-come first-serve basis.
Uninor got 22 pan India licences, Loop 21, Sistema-Shyam (MTS India) 21,
Etisalat-DB 15, S Tel 6, Videocon 21, Idea Cellular 9 and Tata Teleservices 3.

The fresh auction for 2G licences will bring more money to the government. The
telecom industry is expecting that all these operators will get chances to
participate in the auction.

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