Saturday, May 22, 2010

The Great 2G spectrum swindle

Mr. A.Raja, Union Minister for Telecommunication, has been alleged with the one of the biggest scam in the history of India, causing an estimated loss Rs. 60,000cr to the Govt. of India.

The Minister claims that there is no truth in the allegations against him.
He says that whatever procedure was followed in the year 2001 has been adopted by him as well. But there were mere 50 lakh subscribers in the year 2001 compared to 37.5 crore mobile phone users by the end of March 2008.
The logic provided by Mr.Raja can be understood even by a 5 year old boy.
Nevertheless, PM and his fellows are handicapped at sacking The Minister since DMK chief,
M. Karunanidhi intimidate them of withdrawing the support as goggled` Karunanidhi explains that "Raja is a Dalit. That is why dominant forces are levelling malicious charges against him".

Here's the 2G spectrum auctioned in Oct. 2008.

New list of Operators who bid for spectrum -->

Govt raises close to Rs 10K cr by selling spectrum to the above mentioned companies. Now, there is a twist-in-the-tale,
Out of the companies mentioned above, the two companies Swan Telecom (not shown in above table) and Unitech do not have any prior experience in the business of mobile phone, broadband or related services. Swan Telecom has obtained Spectrum license to operate in 14 circles for an amount of 1500 crore while Unitech has obtained license to operate in 22 circles by paying 1600 crore respectively.

Within a matter of six months these two companies have sold majority of their stake to foreign companies. It had sold 45% of its shares for a whopping amount of 4050 Crore to a company called Etisalat which is based out of UAE due to which the valuation of Swan Telecom had increased to Rs. 9990.56 crore. Unitech had sold 60% of its stares to a Norway based company Telenor for Rs. 6120 crore due to which the valuation of Unitech had increased to a monstrous amount of 10,731 crore. Just by leveraging their ability to acquire Spectrum license, Swan Telecom and Unitech had made massive 700% return on their investment within a matter of six months.
Raja’s ministry made Rs. 10,772.65 crore by selling 2G license to 9 companies whereas Swan Telecom and Unitech just by selling half of their stake had proved the fact that their license is worth more than 20,000 crore. If we consider the market value of these two companies, the Government by selling license to these nine companies should have generated 70, 022.42 crore as license fee. In that way our country has incurred a loss of over Rs. 60, 000 crore.

( Stats taken from various resources )

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