S-G Ranjit Kumar rejects CAG’s observations, says no collusion between RIL & Infotel in 2010 auctions

NEW DELHI: India’s second-highest law officer has rejected observations by the national auditor that the telecom department, through a series of decisions, conferred undue favours upon Reliance Jio that caused a loss of Rs 22,842 crore to the exchequer.

Solicitor-General Ranjit Kumar has also disagreed with claims by the Comptroller and Auditor General (CAG) that Reliance Industries Ltd (RIL) — of which Reliance Jio is a subsidiary — colluded with Infotel Broadband Services (IBSPL), the sole winner of pan-India airwaves in the 2300 MHz band (used for 4G services), in spectrum auctions carried out in 2010. Soon after the 2010 sale ended, RIL bought 95% in Infotel and later renamed it Jio.

CAG had alleged in a draft report that Infotel was acting as a front for RIL.

The national auditor had said in its report that the telecom department (DoT) favoured Jio by allowing it to convert its internet service permit (ISP) into a unified licence (UL) at Rs 1,658 crore.

ISP allowed the company to offer wireless broadband services (4G) while UL was needed for voice services. This was the same price paid by telcos in 2001 when the sector was still in its infancy. The price has been struck down by the Supreme Court in its 2012 order. The permission to offer voice services, plus other favours, had caused a loss of Rs 22,842 crore, as per CAG. The CAG’s analysis of the DoT’s actions figures in a draft report on the 2010 auction of spectrum for broadband wireless access (BWA).
“This (CAG’s view) appears to be a very narrow perspective of the matter,” Kumar has said in a 14-page opinion to the telecom department. He added that the introduction of the unified licence (UL) and allowing ISP’s to migrate to a UL and offer voice was in line with existing telecom policy which took into account the interests of industry, consumers and the country.

Kumar’s opinion was sought by the DoT while formulating the department’s responses to the CAG’s analysis. The CAG’s draft report is also the basis for a public interest litigation filed by NGO, Centre for Public Interest Litigation (CPIL), in the Supreme Court, which alleged wrongdoing by the DoT in allowing Jio to offer voice telephony. CPIL’s case is being argued by activist lawyer Prashant Bhushan, who is associated with Arvind Kejriwal’s Aam Aadmi Party (AAP).

Kumar said that the DoT may submit his opinion in the Supreme Court while replying to the petition filed by the NGO.

Reliance Jio was the first company to utilise the government’s new policy, NTP 2012, which permitted an existing ISP to migrate to a UL, or a permit to provide all services including voice telephony, by paying Rs 1,658 crore.

The S-G has argued that in fact there was a strong case for not even charging the Rs 1,658 crore, “since there was no allotment of any additional spectrum by the government to such licensees consequent to their migration.” Moreover, the licensees continued to use the airwaves for which market price was already paid by them in 2010.He further said that charging an entry fee more thanRs 1,658 crore, or charging additional spectrum usage charge “would be arbitrary, unfair”, and “may not be sustainable”.Under the previous national telecom policy, prior to the one formulated in 2012, Rs 1,658 crore was the entry fee paid by a prospective telecom operator for a pan-India permit that came with bundled spectrum of 4.4 Mhz. The fee was based on a valuation of the bundled spectrum arrived at in 2001.