CCI to probe allegation of cartelisation by telecom operators

NEW DELHI: India’s anti-trust watchdog has launched a scrutiny into the recently concluded auction of airwaves for possible cartelisation by telecom operators. The probe follows an allegation made by the Comptroller and Auditor General of India ( CAG) that the 2G spectrum auctions in November and March had failed because the department of telecommunications (DoT) had “wittingly or unwittingly aided and abetted” cartelisation by these companies.


According to an internal document of the DoT, a copy of which was reviewed by ET, the department has sent the national auditor’s draft audit report titled “inefficient allocation and inept management of 2G spectrum and the resultant loss to the government and denial of good quality service to mobile subscribers” to the Competition Commission of India (CCI).

In case the CCI finds that prima facie there appears to be a case of ‘cartelisation’ on the part of the operators, it will ask its directorgeneral investigation to probe the matter.

If the commission concurs with the allegations made by the DG Post and Telecommunications, a unit of the CAG that submitted the audit report, it has the power to levy a maximum penalty of 10% of the average revenue clocked by these companies in the preceding three years.

The CAG, in an April 9 communication to the telecom department, said cartelisation by telcos in the last two auctions had resulted in spectrum valued at thousands of crores being wasted. This is the second time the CAG has alleged a loss of revenue to the exchequer, the first being in 2010 when it had alleged a loss of Rs 1.76 lakh crore for giving away telecom permits and spectrum, later referred to as the 2G spectrum scam.

The audit report has categorically mentioned that while companies like Airtel, Vodafone, Idea Cellular, Reliance Communications and Tata Teleservices repeatedly requested the government to grant them more spectrum to service their ever-increasing subscriber base in certain service areas, they did not buy spectrum for those circles in the auctions, the first to be held after the government switched to selling spectrum rather than allotting it on the basis of the subscribers acquired by each company.

Earlier, the government allotted spectrum to a company as soon as it reached a particular subscriber mark so that an operator could maintain the quality of service rendered to the subscribers. After the Supreme Court cancelled 122 telecom permits in February 2012 and ordered the government to switch over to auctioning spectrum, the government earned just Rs 9,407 crore in the auction of 2G spectrum in November 2012 and 60% of the GSM technology spectrum remained unsold.

The auction of CDMA spectrum failed in the first round as there were no takers. The money earned was less than a quarter of the Rs 40,000 crore the government had estimated. The second round of auctions in March failed to sell any GSM spectrum, even as the government slashed the reserve price by 30% in certain circles. Sistema Shyam was the sole bidder in the CDMA segment, but it bought only 40% of the airwaves on the block.