What IS 2G Spectrum Scam ?

According To Comptroller and Auditor General(CAG) 2G licenses issued to private telecom players at throwaway prices in 2008 2G spectrum allocation had caused revenue loss of 1.76 lakh crore Rules and procedures flouted while issuing licenses

CAG Report on 2G Scam

Here are some of the points made by the CAG Report: 85 firms suppressed facts, gave fictitious papers to DoT DoT kept spectrum pricing issue out of GoM's purview A Raja ignored Prime Minister's, FM's and Law Ministry's advice Spectrum was rare national asset, should have been auctioned 2G spectrum allocated to new players at throw away prices Undue advantage to Swan Telecom in allocation of spectrum Email ID of Swan Telecom shown as that of a Reliance ADA group official

Contd

Spectrum allocated beyond contracted quantity to 9 firms including Bharti, Vodafone, Idea, BSNL, Reliance, Aircel Idea and Spice not given spectrum on grounds of proposed merger- this was against the rules Allocation of 2G spectrum led to loss of Rs. 1.76 lakh crore DoT did not follow its own practise of first-come-first-serve in letter and spirit Calculation of loss based on 3G auction earlier this year Cut-off date for license letters advanced arbitrarily by a week This went against time-tested procedures of government functioning Entire process lacked transparency Undertaken in arbitrary and inequitable manner

CAG indicts Unitech Wireless

Unitech has got license for 22 circles and it paid the Rs.1658 crore license fees for each circle but the company sale their 67.25% equity for Rs.6120 crore to the telenor a company of Norway. Telenor has valued the spectrum of the company CAG said that if we see this deal then the fees for the allotment of license is between Rs.7758 crore to Rs.9100 crore on the other way if it was not their then the govt. will get the fees between Rs.58000 crore to Rs.68000 crore for the 122 license.

WHAT ARE THE CHARGES ON FORMER TELECOM MINISTER A RAJA?

CHEAP TELECOM LICENSES Entry fee for spectrum licenses in 2008 pegged at 2001 prices. Mobile subscriber base had shot up to 350 million in 2008 from 4 million in 2001.

NO PROCEDURES FOLLOWED Rules changed after the game had begun Cut-off date for applications advanced by a week

Contd.
Licenses issued on a first-come-first-served basis No proper auction process followed, no bids invited Raja ignored advice of TRAI, Law Ministry, Finance Ministry TRAI had recommended auctioning of spectrum at market rates

FAVOURITISM, CORPORATES ENCASH PREMIUM Unitech, Swan Telecom got licenses without any prior telecom experience. Swan Telecom given license even though it did not meet eligibility criteria

Contd.
Swan got license for 1537 crore, sold 45% stake to Etisalat for 4200 crore. Unitech Wireless got license for 1661 crore, sold 67.25% stake for 6200 crore. All nine companies paid DoT only 10,772 crore for 2G licences

STEPS TAKEN BY GOVERNMENT AFTER SCAM

Government of India take some important steps looking forward in this Scam:

Set up a special branch of CBI to look into the matter.

Telecom Minister resigns his post after Scan. A Raja also arrested by the Police. CBI is also interacting with the brothers of A Raja and also some business men.

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